UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2016

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

For the transition period from                to

Commission File Number 001-16017

BELMOND LTD.

(Exact name of registrant as specified in its charter) 

Bermuda	98-0223493
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer 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 exchange on 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.)

 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 definitions 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, 2016 (the last business day of the registrant’s second fiscal quarter in 2016) was approximately $992,000,000.

 As of February 20, 2017, 101,804,959 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 17(c) to the Financial Statements (Item 8)).

DOCUMENTS INCORPORATED BY REFERENCE: None

Table of Contents

			Page
PART I	Item 1	Business	4
	Item 1A	Risk Factors	16
	Item 1B	Unresolved Staff Comments	28
	Item 2	Properties	28
	Item 3	Legal Proceedings	28
	Item 4	Mine Safety Disclosures	31
PART II	Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	32
	Item 6	Selected Financial Data	33
	Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
	Item 7A	Quantitative and Qualitative Disclosures About Market Risk	60
	Item 8	Financial Statements and Supplementary Data	61
	Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	116
	Item 9A	Controls and Procedures	116
	Item 9B	Other Information	118
PART III	Item 10	Directors, Executive Officers and Corporate Governance	119
	Item 11	Executive Compensation	123
	Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	126
	Item 13	Certain Relationships and Related Transactions, and Director Independence	131
	Item 14	Principal Accounting Fees and Services	131
PART IV	Item 15	Exhibits and Financial Statement Schedules	133
		Signatures	135
		Exhibit Index	137

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FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains statements that constitute "Forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are any statements other than of historical fact, including statements regarding the intent, belief or current expectations of Belmond Ltd. and/or any of its directors or officers with respect to the matters discussed in this Annual Report. In some cases, forward-looking statements can be identified by the use of words such as “may,” “potential,” “anticipate,” “target,” “expect,” “estimate,” “intend,” “should,” “plan,” “goal,” “believe,” or other words of similar meaning. Such forward-looking statements appear in several places in this Annual Report, including but not limited to Item 1—Business, Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations, and Item 7A—Quantitative and Qualitative Disclosures about Market Risk.

All forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those discussed in, or implied by, the forward-looking statements.

Actual results could differ materially from those anticipated in the forward-looking statements due to a number of factors, including but not limited to those described in Item 1A—Risk Factors.

Investors are cautioned not to place undue reliance on any forward-looking statements made in this Annual Report which are based on currently available operational, financial, and competitive information and as such, are not guarantees of future performance.  Instead, these forward-looking statements reflect management's opinion, expectation or belief only as of the date on which they are made. Except as otherwise required by law, Belmond Ltd. undertakes no obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.

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PART I

ITEM 1.        Business

Belmond Ltd. is incorporated in the Islands of Bermuda and is a “foreign private issuer” as defined in Rule 3b-4 promulgated by the U.S. Securities and Exchange Commission (“SEC”) under the U.S. Securities Exchange Act of 1934 (the “1934 Act”) and in Rule 405 under the U.S. Securities Act of 1933. As a result, it is eligible to file its annual reports pursuant to Section 13 of the 1934 Act on Form 20-F (in lieu of Form 10-K) and to file its interim reports on Form 6-K (in lieu of Forms 10-Q and 8-K). However, the Company has elected to file its annual and interim reports on Forms 10-K, 10-Q and 8-K, including any instructions therein that relate specifically to foreign private issuers. The class A common shares of the Company are listed on the New York Stock Exchange (“NYSE”).

The terms "Belmond" and the "Company" are used in this report to refer to Belmond Ltd. and Belmond Ltd. and its subsidiaries, unless otherwise stated.

These reports and amendments to them are available free of charge on the Internet website of the Company as soon as reasonably practicable after they are filed electronically with the SEC. The Company's principal Internet website address is belmond.com. Unless specifically noted, information on the Belmond website is not incorporated by reference into this Form 10-K annual report.

Pursuant to Rule 3a12-3 under the 1934 Act regarding foreign private issuers, the proxy solicitations of the Company are not subject to the disclosure and procedural requirements of Regulation 14A under the 1934 Act, and transactions in the Company’s equity securities by its officers, directors and significant shareholders are exempt from the reporting and liability provisions of Section 16 of the 1934 Act.

Introduction

Belmond is a leading luxury hotel company and sophisticated adventure travel operator with exposure to both mature and emerging national economies. The Company’s predecessor began acquiring hotels in 1976 and organized the Company in 1994. Belmond currently owns, partially-owns and/or operates 45 properties (with two additional businesses scheduled for future openings, the Belmond Cadogan Hotel in London, England and the Belmond Andean Explorer train in Peru), consisting of 34 highly individual deluxe hotels, one stand-alone restaurant, seven tourist trains and three river/canal cruise businesses. This portfolio includes one long-term leased hotel in Bali, Indonesia where the owner dispossessed Belmond from operation of the hotel in November 2013 (see Item 3—Legal Proceedings). The locations of Belmond's 45 properties operating in 23 countries are shown in the map on the preceding page. Belmond acquires, leases or manages only distinctive properties in areas of outstanding cultural, historic or recreational interest in order to provide luxury lifestyle experiences for the discerning traveler.

Revenue, earnings and identifiable assets of Belmond in 2016, 2015 and 2014 for Belmond's business segments and geographic areas are presented in Note 23 to the Financial Statements (Item 8). Belmond's operating segments are aggregated into six reportable segments, namely owned hotels in each of Europe, North America and Rest of World, owned trains and cruises, part-owned/managed hotels and part-owned/managed trains.

Belmond revised the order of the presentation of these segments in the year ended December 31, 2016 and included a new sub-total to show management fees earned by the Company. In addition, Belmond reclassified certain expenses associated with the Company’s development team from the Part-owned/managed hotels segment to central costs. Prior periods have been re-presented to reflect the current period presentation. There has not been a material impact on the consolidated financial statements.

Hotels represent the largest part of Belmond’s business, contributing 87% of revenue in 2016, 87% of revenue in 2015 and 86% in 2014. Trains and cruises accounted for 13% of revenue in 2016, 13% of revenue in 2015 and 14% in 2014. Approximately 89% of Belmond’s customer revenue in 2016 was from leisure travelers, with approximately 47% originating from North America, 37% from Europe and the remaining 14% from elsewhere in the world.

Belmond’s worldwide portfolio of hotels currently in operation consists of 3,272 individual guest rooms and multiple-room suites, each known as a “key”. Hotels owned by Belmond in 2016 achieved an average daily room rate (“ADR”) of $490 (2015 - $481; 2014 - $523) and a revenue per available room (“RevPAR”) of $298 (2015 - $295; 2014 - $306).

In recent years, Belmond has sold to third parties a number of properties not considered key to Belmond’s portfolio of unique, high-valued properties. In March 2014, Belmond sold Inn at Perry Cabin by Belmond on the eastern shore of Maryland, with Belmond continuing to manage the hotel under a ten-year management agreement (that permits termination on the fifth anniversary

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of the agreement) with the new owner. See Note 4 to the Financial Statements. In May 2015, Belmond, together with its joint venture partner, each sold their 50% ownership in the entity which owned the Hotel Ritz by Belmond in Madrid, Spain and Belmond ended its agreement to manage the hotel. See Note 6 to the Financial Statements.

On February 23, 2014, the Company (formerly known as Orient-Express Hotels Ltd.) announced that its board of directors had approved a proposal to operate the Company's portfolio of luxury hotels and travel experiences under a new brand name—"Belmond"—from March 10, 2014, and to change its principal Internet website address to belmond.com. Belmond has retained its long-term license agreement with SNCF, the French transportation company that owns the "Orient-Express" trademark, for the Venice Simplon-Orient-Express train. With the decision to introduce the "Belmond" brand, Belmond also entered into an agreement with SNCF to terminate (with effect from December 31, 2014) the "Orient-Express" license for hotel use, without any cost or penalty. At the 2014 Annual General Meeting of Shareholders, shareholders approved a change in Belmond's corporate name from Orient-Express Hotels Ltd. to Belmond Ltd. in order to align Belmond's corporate identity with that of its primary luxury brand. On July 28, 2014, Belmond changed the ticker symbol of its class A common shares listed on the New York Stock Exchange from OEH to BEL.

On March 21, 2014, Belmond entered into a $657,000,000 senior secured credit facility, consisting of a $552,000,000 seven-year term loan and a $105,000,000 five-year, dual-currency revolving credit facility. The term loan comprised a $345,000,000 U.S. dollar-denominated tranche and a €150,000,000 euro-denominated tranche ($207,000,000 as of the completion date). Belmond used the proceeds from the term loan to refinance substantially all of the funded debt of Belmond (other than the debt of Belmond Charleston Place, a consolidated variable interest entity with separate non-recourse financing). On June 2, 2015, Belmond entered into an amendment to its senior secured credit facility to reduce the interest rate on the euro-denominated tranche to EURIBOR plus a 3.00% margin from EURIBOR plus a 3.25% margin.

In August 2014, Charleston Center LLC entered into an $86,000,000 loan secured on its real and personal property. This loan had no amortization and is non-recourse to Belmond. This loan had an August 2019 maturity and an interest rate of LIBOR plus 2.12% per annum. In June 2016, Charleston Center LLC refinanced this loan with a $112,000,000 new loan with the same August 2019 maturity. The interest rate on the new loan is LIBOR plus 2.35% per annum, has no amortization and is non-recourse to Belmond. The additional proceeds were used to repay a 1984 development loan from a municipal agency in the principal amount of $10,000,000 and accrued interest of $16,819,000. In connection with the early repayment of the loan, Belmond negotiated a discount that resulted in a net gain reported in the statements of consolidated operations of $1,200,000 upon the extinguishment of the debt, including the payment of a tax indemnity to our partners of $2,800,000 in respect of their allocation of income from the discount arising on the cancellation of indebtedness. See Note 10 to the Financial Statements.

On July 8, 2014, Belmond announced the execution of a management agreement with Cadogan Hotel Partners Limited to operate Belmond Cadogan Hotel, a 64-key hotel in the Knightsbridge area of London, England. The 127-year old hotel closed at the end of July 2014 to undergo a $48,000,000 investment project. The fully renovated and re-conceptualized Belmond Cadogan Hotel is expected to open in 2018 with refurbished public areas and the reconfiguration reduced to 54 keys in order to accommodate demand from luxury travelers for larger junior suites and suites.

On August 30, 2016, the Company commenced operations of Belmond Grand Hibernian, the first overnight luxury rail experience of its kind in Ireland. The luxury sleeper train accommodates up to 40 guests in 20 en-suite cabins. Belmond Grand Hibernian builds on the Company's expertise in operating a stable of the world's most famous trains, including Belmond Royal Scotsman, currently the U.K.'s only luxury touring sleeper train, and the legendary Venice Simplon-Orient-Express.

Owned Hotels—Europe

Italy

Belmond Hotel Cipriani—95 keys—in Venice was built for the most part in the 1950s and is located on about five acres (part on long-term lease) on Giudecca Island across from the Piazza San Marco which is accessible by a free private boat service. Most of the rooms have views overlooking the Venetian lagoon. Features include fine cuisine in three indoor and outdoor restaurants -- one of which gained a Michelin star, the Oro Restaurant -- gardens and terraces encompassing an Olympic-sized swimming pool, a tennis court, a spa and fitness center, and a large banquet and meeting facility situated in an historic refurbished warehouse. In 2016, 15 rooms in the Palazzo Vendramin and Palazzetto were refurbished.

Belmond Hotel Splendido and Belmond Splendido Mare—83 keys—overlook picturesque Portofino harbor on the Italian Riviera. Set on four acres, the main hotel was built in 1901 and is surrounded by gardens and terraces which include a swimming pool, spa and tennis court. There are two restaurants each with open-air dining as well as banquet/meeting rooms, and a shuttle

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service linking the main hotel with the smaller Belmond Splendido Mare on the harbor below. In 2016, ten suites and guest rooms were refurbished at Belmond Hotel Splendido.

Belmond Villa San Michele—45 keys—is located in Fiesole, a short distance from Florence. Originally built as a monastery in the 15th century with a façade attributed to Michelangelo, it has stunning views over historic Florence and the Arno River Valley.  Belmond has remodeled and expanded the guest accommodation to luxury standards in recent years including the addition of a swimming pool. A shuttle service is provided into the UNESCO World Heritage listed center of Florence. The property occupies ten acres. In 2016, the property created a new function facility to cater to the popular wedding and celebrations market.

Belmond Hotel Caruso—50 keys—in Ravello is located on three hill-top acres overlooking the Amalfi coast near Naples and ancient Roman and Greek archeological sites such as Pompeii and Paestum. The Amalfi coast, the city of Naples and the archeological sites have been designated UNESCO World Heritage sites. Once a nobleman’s palace, parts of the building date to the 11th century. Operated as a hotel for many years, Belmond rebuilt the property after acquiring it and reopened it in 2005. Amenities include two restaurants, a swimming pool, spa and extensive gardens.

Belmond Grand Hotel Timeo—70 keys—in Taormina, Sicily was purchased in January 2010 and renovated during winter closure periods since then. With panoramic views of Mount Etna (a UNESCO World Heritage site) and the Gulf of Naxos from its main terrace, this hotel is widely considered the most luxurious hotel in Taormina and is situated in the city center next to the second century Greek Theater. Built in 1873 on a total site of about ten acres, the hotel features a restaurant serving regional specialties, a spa and fitness center, swimming pool, and separate banqueting and conference facilities, all surrounded by six acres of parkland.

Belmond Villa Sant’Andrea—69 keys—was purchased and renovated at the same time as Belmond Grand Hotel Timeo. Built in 1830 on Taormina's Bay of Mazzarò with its own beach, the hotel has the atmosphere of a private villa set in lush gardens, a total site of about two acres, with many of the guest rooms and the hotel’s seafood restaurant and swimming pool looking onto the Calabrian coast. Belmond completed construction in May 2014 of six poolside suites. During the 2015/16 winter closure, four new units were built (three junior suites and one double room) in a prime location on the pool side of the property with stunning views of the Bay. Belmond Grand Hotel Timeo and Belmond Villa Sant’Andrea are linked by a shuttle service so that guests may enjoy the facilities at both hotels.

All of these Italian properties operate seasonally, closing for varying periods during the winter.

Spain

Belmond La Residencia—68 keys including a separate villa—is located in the charming village of Deià on the rugged northwest coast of the island of Mallorca with panoramic views of the Tramuntana Mountains, a UNESCO World Heritage site. The core of Belmond La Residencia was originally created from two adjoining 16th and 17th century country houses set on an owned hillside site of 30 acres. The hotel features two restaurants, including the gastronomic El Olivo, meeting rooms for up to 100 guests, two large swimming pools, tennis courts and a spa and fitness center with an indoor pool. In 2015, the property refurbished 12 junior suites and created a new bar. During the 2015/16 winter closure, the property commenced the first phase of the construction of six new suites with the opening of the new units scheduled for spring 2017.

Portugal

Belmond Reid’s Palace—158 keys—is a famous hotel on the island of Madeira, situated on ten acres of semitropical gardens on a cliff top above the sea and the bay of Funchal, the main port city. Opened in 1891, the hotel has five seasonal restaurants and banquet/meeting facilities. Leisure and sports amenities include fresh and sea water swimming pools, a third tide-filled pool, tennis courts, ocean water sports, a spa and fitness center and access to two championship golf courses. It has year-round appeal, serving both winter escapes to the sun and regular summer holidays.

United Kingdom

Belmond Le Manoir aux Quat’Saisons—32 keys—is located in a picturesque village in Oxfordshire, England about an hour’s drive west of London. The main part of the hotel is a 16th century manor house set in 27 acres of gardens. Each suite has an entirely individual design. The property was developed by Raymond Blanc, one of Britain’s most famous chef-patrons, and the hotel’s restaurant has two stars in the Michelin Guide. Mr. Blanc has given a four-year commitment commencing January 2015 to remain the chef patron at the hotel and advises the restaurants at other Belmond hotels. The hotel recently expanded its event and meeting space to increase its appeal to social and corporate groups.

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Russia

Belmond Grand Hotel Europe—266 keys—in St. Petersburg was originally built in 1875. The hotel occupies one side of an entire city block on the fashionable Nevsky Prospect in the UNESCO World heritage listed heart of the city near the Russian Museum, Philharmonic Society, Mikhailovsky Theater and other tourist and cultural attractions as well as the commercial center.  There are three restaurants on the premises, as well as a grand ballroom, meeting facilities, a spa and fitness center, and several retail shops. Luxury historic suites reflect the rich history of the hotel and city, named after famous guests like Pavarotti, Stravinsky and the Romanov tsars. The City of St. Petersburg owns a 6.5% minority interest in the hotel building. Recent improvements include six ultra-luxury suites that opened in July 2014, a new concept restaurant by a top designer, and improved meeting and banqueting rooms. In 2016, the property commenced renovations to its famous Krysha ballroom which is expected to be completed in 2017.

Owned Hotels—North America

United States

Belmond Charleston Place—434 keys—is located in the heart of historic Charleston, South Carolina, a popular destination for tourists and business meetings. Opened in 1986, the hotel has two restaurants, extensive banqueting and conference space including a grand ballroom, a spa, fitness center and rooftop swimming pool, and a shopping arcade of 24 retail outlets leased by third parties.  The hotel also owns the adjacent historic Riviera Theater remodeled as additional conference space and retail shops. In December 2015, the property completed a three-year phased refurbishment of all of its guest rooms. In 2016, the property refurbished a retail outlet space, converting it into an upscale sports bar with direct access to Market Street, a busy main street in Charleston, and expects to complete the renovation of its ballroom and conference facilities in early 2017.

While Belmond has a 19.9% equity interest in Belmond Charleston Place, Belmond manages the property under an exclusive long-term contract and has a number of loans to the hotel outstanding. On evaluating its various interests in the hotel, Belmond has concluded that it is the primary beneficiary of this variable interest entity and, accordingly, consolidates the assets and liabilities of the hotel in Belmond’s balance sheets and consolidates the hotel’s results in Belmond’s statements of operations, comprehensive income and cash flows. See Note 5 to the Financial Statements.

Belmond El Encanto—92 keys—in Santa Barbara, California is located in the hills above the city center, with views over the Pacific Ocean. Dating from 1913, it sits in seven-acre landscaped gardens with heritage features and mature trees. Guest rooms are in authentic, California Rivera-style bungalows spread throughout the grounds. Belmond reopened the resort in 2013 following extensive renovation and it now includes an acclaimed restaurant, infinity-edge swimming pool, a destination spa and fitness center. Belmond El Encanto is Santa Barbara's only Forbes Five Star hotel.

‘21’ Club is Belmond's stand-alone restaurant, a famous landmark at 21 West 52nd Street in midtown Manhattan near the Broadway theater district and many top tourist attractions. Originally a speakeasy during Prohibition in the 1920s, this restaurant is open to the public, occupies three brownstone buildings and features fine American cuisine. It serves à la carte meals in the original bar restaurant and a separate dining room upstairs, and also has ten banqueting rooms used for receptions and events, including the famous secret wine cellar. Belmond added Bar ‘21’ on the restaurant’s ground floor lobby and reconfigured and expanded two event spaces on the first floor for private receptions.

Caribbean

Belmond La Samanna—91 keys including eight villas—is located on the island of St. Martin in the French West Indies.  Built in 1973, the hotel consists of several buildings on 16 acres of owned land along a 4,000-foot beach. Amenities include two restaurants, two swimming pools, a spa, tennis courts, fitness and conference centers, boating and ocean water sports, and extensive gardens. The hotel is open most of the year, seasonally closing during the autumn months. In recent years, Belmond has renovated many of the guest rooms and the main restaurant, bar and lobby area. The eight luxury villas located on part of the 35 acres of owned vacant land adjoining Belmond La Samanna provide additional villa-suite room stock for the hotel. The remaining land is available for future expansion.

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Mexico

Belmond Maroma Resort and Spa—63 keys—is on Mexico’s Riviera Maya on the Caribbean coast of the Yucatan Peninsula, about 30 miles south of Cancun. The resort opened in 1995 and is set in 25 owned acres of verdant jungle along a 1,000-foot beach. The Cozumel barrier reef is offshore where guests may fish, snorkel and scuba-dive. Important Mayan archeological sites are nearby. Rooms are arranged in low-rise villas and there are three restaurants, three swimming pools, tennis courts and spacious spa facilities. The hotel purchased a beach concession on an adjacent piece of land in 2016. Belmond also owns a 28-acre tract adjacent to Belmond Maroma Resort and Spa for hotel expansion or construction of other improvements.

Belmond Casa de Sierra Nevada—37 keys—is a luxury resort in the colonial town of San Miguel de Allende, a UNESCO World Heritage site. Opened in 1952, the hotel consists of nine owned Spanish colonial buildings built in the 16th and 18th centuries.  Belmond has renovated the hotel, including its restaurant, and has built new suites as well as a swimming pool, spa and garden area. The total site is approximately two acres. Belmond also owns a nearby cooking school and retail shop operated in conjunction with the hotel.

Owned Hotels—Rest of World

South America

Belmond Copacabana Palace—239 keys—was built in the 1920s on a three-acre owned site facing Copacabana Beach near the central business district of Rio de Janeiro, Brazil. It is a famous hotel in South America and features two fine-dining restaurants, 13 function rooms hosting up to 1,300 guests, including the hotel’s refurbished former casino rooms, a 25 meter long swimming pool, spa and fitness center, and a roof-top tennis court and a private rooftop plunge pool for the penthouses. In December 2012, Belmond completed a two-year phased refurbishment of the guest rooms in the main building including an expanded and restyled lobby and, in early 2014, converted one of the hotel's bars into a new pan-Asian restaurant. Third parties own a less than 2% minority interest in the hotel.

Belmond Hotel das Cataratas—193 keys—is located beside the famous Iguassu Falls in Brazil on the border with Argentina, a UNESCO World Heritage site. Belmond was awarded in 2007 a 20-year lease of the hotel from the government. It is the only hotel in the national park on the Brazilian side of the falls. First opened in 1958 on about four acres, the hotel has two restaurants, two bars, conference facilities, a swimming pool, spa, fitness center and tennis court, and tropical gardens looking onto the falls. Belmond had applied in 2009 to the Brazilian Ministry of Planning, Budget and Management for an amendment of the lease, but the Secretary of the Ministry denied the application in September 2014. Belmond has since claimed against the Federal Government for breach of the lease and has received temporary relief at the trial court, which was affirmed twice on appeal in the form of, among other things, a 25% lease reduction. See "Item 3—Legal Proceedings."

Belmond Miraflores Park—89 keys—is located in the fashionable Miraflores residential district of Lima, Peru. This all-suite owned hotel, occupying about an acre of land, faces the Pacific Ocean and is conveniently located to the city's commercial and cultural centers. Following a five-month closure for a $7,500,000 renovation project, Belmond reopened the hotel in April 2014 with refreshed guest accommodations, conference facilities and public areas. The hotel features two restaurants, large banqueting and meeting rooms and an exclusive lounge for guests staying on the upper floors. Leisure facilities include a spa, gym and rooftop swimming pool with ocean views. During 2016, the property converted former office space on its third floor into eight executive guest rooms. See also "Item 3—Legal Proceedings."

Africa

Belmond Mount Nelson Hotel—198 keys—in Cape Town, South Africa is a famous historic property opened in 1899. With beautiful gardens and pools, it stands just below Table Mountain and is within walking distance of the main business, civic and cultural center of the city. The hotel has two restaurants, a ballroom, two swimming pools, tennis courts, a spa and fitness center, and a business center with meeting rooms, all situated on ten acres of owned grounds. In 2012, Belmond renovated 30 guest rooms and the restaurant overlooking the main swimming pool and gardens and, in 2013, refurbished an additional 36 guest rooms. In 2014, Belmond refurbished eight junior suites and 18 suites, including its eight garden cottages. In 2015, the hotel's original ballroom and three conference rooms were renovated and in 2016, 48 keys in the main building were upgraded and refurbished. The hotel has expansion potential through conversion of adjacent owned residential properties.

Belmond Khwai River Lodge, Belmond Eagle Island Lodge and Belmond Savute Elephant Lodge—39 keys in total—comprise Belmond’s African safari experience in Botswana consisting of three separate game-viewing lodges. Established in 1971, Belmond holds leases to the lodge sites in the Okavango River delta and nearby game reserves, where African wildlife can be observed from open safari vehicles or boats. The leases expire between 2021 and 2041. Botswana's Okavango Delta was added

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to the UNESCO World Heritage list in June 2014. Each camp has 12 or 15 luxury one bedroom tents under thatched roofs, and guests travel between the camps by light aircraft. Boating, fishing, hiking and swimming are offered at the various sites. In 2015, Belmond closed Belmond Eagle Island Lodge to undertake a full refurbishment of the property and re-opened it in November 2015. Conde Nast Traveller included Belmond Eagle Island Lodge on its 2016 Hotlist and the property received an award from International Property & Travel in 2016.

Asia

Belmond Napasai—68 keys including 11 private villas—is located on its own beach on the north side of Koh Samui island of Thailand in the Gulf of Siam. It originally opened in 2004 and features two restaurants, tennis courts, a swimming pool, a spa and water sports such as sailing, diving and snorkeling in the nearby coral reef. The guest rooms are arranged in seaview and garden cottages on a total site of about 40 owned acres, which includes vacant land for future expansion. The villas, most of which are owned by third parties, are available for rent by hotel guests.

Belmond Jimbaran Puri—64 keys including 22 villas—is on the island of Bali in Indonesia and occupies seven beachfront acres under long-term lease through 2050 on the south coast of the island. Guest rooms are situated in cottages, and there are two restaurants, a spa, swimming pool and ocean water sports. Each villa has its own private plunge pool.

Ubud Hanging Gardens—38 keys—also on Bali is located on terraces on about seven steep hillside acres above the Ayung River gorge in the rain forest interior of the island. This long-term leased hotel opened in 2005 and offers two restaurants, a swimming pool and spa, and a free shuttle bus to the nearby town of Ubud, a cultural and arts center. Each key has its own private plunge pool.

As previously reported, following an unannounced dispossession of Belmond from Ubud Hanging Gardens by the third-party owner in November 2013, Belmond was unable to continue operating the hotel. Belmond believed this action by the owner was unlawful and in breach of its long-term lease arrangement and constituted a wrongful dispossession. Accordingly, Belmond has taken appropriate legal steps to protect its interests and is currently seeking to enforce its Singapore arbitral award for $8.5 million against the owner in Indonesia. See Item 3—Legal Proceedings.

Belmond La Résidence d’Angkor—59 keys—opened in 2002 and is situated in walled gardens in Siem Reap, Cambodia. The hotel occupies a site of about two acres under long-term lease until 2066. The ancient Temples of Angkor Wat, a UNESCO World Heritage site and the principal tourist attraction in the area, are nearby. The hotel has two indoor/outdoor restaurants, swimming pool, and a spa and fitness center. The property completed a full renovation of its guest rooms and added a pool suite by combining two keys overlooking the pool in 2016.

Belmond Governor’s Residence—49 keys—was built in the 1920s in the embassy district of Yangon, Myanmar (Burma) originally as the official home of one of the Burmese state governors and near the great Shwedagon pagoda in the city. The building is a two-story teak mansion surrounded by verandas overlooking lotus gardens on a site of about two acres leased until 2067. Belmond Governor's Residence opened as a hotel in 1997. It includes two restaurants and swimming pool.

Belmond La Résidence Phou Vao—34 keys—is in Luang Prabang, the ancient capital of Laos and a UNESCO World Heritage site. Belmond owns a 69% interest in the entity which owns the property. The hotel opened in 2001 and occupies about eight hillside acres under long-term lease until 2028. Guest rooms are in four two-story buildings surrounded by lush gardens that include a restaurant, spa and swimming pool.

Part-Owned/Managed Hotels

Hotel Ritz by Belmond—As noted in the "Introduction" above and in Note 6 to the Financial Statements, in May 2015, Belmond, together with its joint venture partner, each sold their 50% ownership in the entity which owned the Hotel Ritz by Belmond, Madrid, Spain. Belmond and its joint venture partner sold the shares in the entity that owns the hotel for gross proceeds of €130,000,000 ($144,529,000 at date of sale). As a condition of the sale, Belmond’s management contract with Hotel Ritz by Belmond was terminated, resulting in the receipt of a termination fee of $2,292,000 in the year ended December 31, 2015.

United States

Inn at Perry Cabin by Belmond—78 keys—was built in 1812 as a country inn located in St. Michaels, Maryland on the eastern shore of Chesapeake Bay. Set on 25 waterfront acres, it is an attractive conference and vacation destination, particularly for guests from the Washington, D.C., Baltimore and Philadelphia areas. During its ownership, Belmond expanded the hotel by adding guest rooms, a conference facility, a swimming pool and spa.

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As noted in the "Introduction" above, Belmond completed the sale of Inn at Perry Cabin in March 2014 for gross proceeds of $39,700,000 and at the same time, entered into a ten-year management agreement (that permits termination on the fifth anniversary of the agreement) with the owner under which Belmond operates the property as Inn at Perry Cabin by Belmond. As part of the management agreement, Belmond funded $3,000,000 of key money to be used for agreed capital enhancements.

Peru

Belmond has a 50%/50% joint venture with local investors in Peru which operates the following four hotels under Belmond’s exclusive management.

Belmond Hotel Monasterio—122 keys—is located in the ancient Inca capital of Cusco, an important tourist destination in Peru and a UNESCO World Heritage site. The hotel was originally built as a Spanish monastery in the 16th century, converted to hotel use in 1965, and has been upgraded since then. The guest rooms and two restaurants are arranged around open-air cloisters. Many of the guest rooms are specially oxygenated due to Cusco's high altitude. In 2015, Belmond completed a three-year phased renovation of guest rooms and bathrooms. The site measures approximately three acres under long-term lease until 2037, with options to renew until 2067.

Belmond Palacio Nazarenas—55 keys—is located next door to Belmond Hotel Monasterio on the same site in Cusco and is a former palace and convent which the joint venture, using its own financial resources, has rebuilt as a separate hotel and opened in June 2012. This is an all-suite hotel arranged around courtyards and featuring oxygenated guest rooms, an outdoor heated swimming pool, spa, and poolside restaurant and bar. During construction, archeologists discovered Incan artifacts and foundations which have been preserved and displayed in the hotel. The property is subject to a lease until 2042, with an option to renew until 2067.

Belmond Sanctuary Lodge—31 keys—is the only hotel at the famous mountaintop Inca ruins at Machu Picchu, a UNESCO World Heritage site. All of the rooms have been refurbished to a high standard. In 2016, Belmond completed a three-year phased renovation of all guest rooms and suites, as well as the hotel's reception and public areas. The joint venture long-term leases the hotel as well as seven acres for possible future expansion at the foot of the ruins, close to the town on the Urubamba River where tourists arrive by train. The lease has been extended to 2025. See also Item 3—Legal Proceedings.

Belmond Hotel Rio Sagrado—23 keys including two villas—is owned by Belmond's Peru hotel joint venture and is located in the Sacred Valley of the Incas between Cusco and Machu Picchu. Opened in 2009, this rustic hotel has a spa with indoor plunge pool and extensive gardens beside the Urubamba River on a site of about six acres set against an imposing mountain backdrop.  The Sacred Valley is a popular part of holiday itineraries in Peru, and a station on Belmond’s PeruRail train service is a short distance from the hotel. During 2013, the joint venture refurbished the guest rooms, enlarged the spa and installed an outdoor heated swimming pool. In 2014, the property enhanced the main entry arrival with new entry drive and landscape improvements and added a train platform/lounge to accommodate Hiram Bingham train guests stopping at the hotel. In 2015, the joint venture acquired an adjacent parcel of land of approximately two and a half acres on which the joint venture is contemplating further development.

Owned Trains and Cruises

Venice Simplon-Orient-Express comprises 18 historic railway cars, all of which have been refurbished in original 1920s/1930s décor and meet modern safety standards. It operates once or twice weekly principally between multiple cities and Venice from March to November each year via Paris, Zurich and Innsbruck on a scenic route through the Alps. The journey from London to Venice departs from London Victoria station on the Belmond British Pullman train; passengers then cross the English Channel by coach on the Eurotunnel shuttle train. Occasional trips are also made to Vienna, Prague, Berlin, Copenhagen, Stockholm, Budapest and Istanbul. During 2015, the bar was completely refurbished and as of early 2016, the train added air conditioning to its four public carriages and commenced a two-year project to add air-conditioning to all of its guest rooms. Venice-Simplon-Orient-Express is made up of three dining cars, one bar car and sleeper cars carrying up to 182 passengers in 85 double and 12 single cabins. Venice Simplon-Orient-Express is also available for charter by private groups.

Belmond British Pullman consists of 11 Pullman dining cars in Britain which operate all year originating out of London on short excursions to places of historic, scenic or sporting interest in southern England, including some weekend trips when passengers stay at local hotels. Full fine dining is offered on every departure.

Belmond Northern Belle is a tourist train offering day trips and charter service principally in the north of England.  It builds on the success of Belmond’s British Pullman business, which focuses on the south of England around London. This train consists of

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seven owned dining cars elegantly decorated to be reminiscent of old British “Belle” trains of the 1930s, plus three kitchen and service cars, and can carry up to 276 passengers. Fine dining is served on board and passengers stay in local hotels on some weekend itineraries.

Belmond Royal Scotsman is a luxury sleeper train owned by Belmond and comprises nine Edwardian-style cars, including five sleeping cars (each compartment with private bathroom), two dining cars and a bar/observation car, and accommodates up to 36 passengers. Operating from April to October, the train travels on itineraries of up to seven nights through the Scottish countryside affording passengers the opportunity to visit clan castles, historic battlegrounds, famous Scotch whiskey distilleries and other points of interest. During 2016, an additional car was added to the train, which includes two spa treatment cabins and four additional berths which connect to accommodate families.

Belmond Grand Hibernian is a luxury sleeper train owned by Belmond and comprises ten Georgain-styled railway cars, including five sleeping cars (each compartment with a private bathroom), two dining cars, a bar/observation car and accommodates up to 40 passengers. It operates from April to October and travels on three itineraries through the Irish countryside affording passengers the opportunity to visit castles, lakes, towns, whiskey distilleries and other places of interest. This train commenced service in August 2016 through mid-October 2016 and will begin its 2017 season in April.

Belmond Road to Mandalay is a luxury river cruise ship on the Ayeyarwady (Irrawaddy) River in central Myanmar.  The ship was a Rhine River cruiser built in 1964 that Belmond bought and refurbished. It has 43 air conditioned cabins with private bathrooms, spacious restaurant and lounge areas, and a canopied sun deck with swimming pool. The ship travels between Mandalay and Bagan up to eight times each month and carries up to 82 passengers who may enjoy sightseeing along the river and guided shore excursions to places of cultural interest. Three- to 11-night itineraries are offered. The ship does not operate in the summer months and occasionally when the water level of the river falls too low due to lack of rainfall. During 2015, the top deck barbeque and bar venues were refurbished.

Belmond Orcaella, Belmond's second river cruise ship in Myanmar, was built in Yangon to Belmond's luxury standards and launched in July 2013. The ship is named after the dolphins found in the inland waterways of the country, and accommodates up to 50 passengers in 25 spacious river-facing cabins, with restaurant, lounge and bar, and sundeck with plunge pool. It cruises between Yangon and the far north of Myanmar on the Ayeyarwady and Chindwin Rivers on seven- to 11-night itineraries to areas accessible to Belmond Orcaella because of its shallow draft and maneuverability. The ship is subject to a five-year charter that expires in 2018 and the Company holds an option to renew the charter for an additional five years.

Belmond Afloat in France is composed of five luxury river and canal boats (called péniche-hôtels) owned by Belmond and operating in Burgundy, Provence and other rural regions of France. They accommodate between four and 12 passengers each in double berth compartments with private bathrooms, and some have small plunge pools on deck. They operate seasonally between April and October on three- to six-night itineraries with guests dining on board or in nearby restaurants. Shore excursions are organized each day. It is anticipated that during 2017, two additional canal boats accommodating eight passengers each will be added to the fleet and will operate in the Champagne and Alsace regions of France.

All Belmond trains and cruises are available for private charter.

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Part-Owned/Managed Trains

PeruRail: Belmond and local Peruvian investors formed two 50%/50% owned companies (PeruRail S.A. and Ferrocarril Transandino S.A., together "PeruRail"), as a joint venture that was awarded in 1999 a 30-year franchise to operate the track and other infrastructure of the state-owned railways in southern and southeastern Peru and a license to operate passenger and freight services in those areas. The franchise may be extended every five years upon PeruRail's application and government approval, and currently expires in 2034 with four additional five-year extensions remaining. PeruRail pays the Peruvian government fees related to traffic levels and the use of rail infrastructure, locomotives and rolling stock. The 70-mile Cusco-Machu Picchu line, carrying mainly tourists as well as local passenger traffic, is the principal means of access to the famous Inca ruins at Machu Picchu because there is no convenient road. Another carrier operates on this line in competition with PeruRail. A second rail line runs from Cusco to Matarani on the Pacific Ocean (via Arequipa) and to Puno on Lake Titicaca, and principally serves freight traffic under contract, an activity PeruRail is expanding by hauling the output of local copper mines in southern Peru to the Pacific port for export. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Year on Year Comparisons—Year ended December 31, 2016 compared to year ended December 31, 2015 and year ended December 31, 2015 compared to year ended December 31, 2014—Part-Owned/Managed trains, 2015 compared to 2014". The Cusco-Machu Picchu line connects four of Belmond’s Peruvian hotels, allowing inclusive tours served by Belmond’s Hiram Bingham luxury daytime tourist train comprising two dining cars and a bar/observation car with capacity up to 84 passengers.  PeruRail also operates a daytime tourist train currently called the Andean Explorer on the Cusco-Puno route through the High Andes mountains and which is expected to move to the Cusco-Machu Picchu line under a new name. In 2017, a new sleeper train is expected to be launched under the name Andean Explorer and is expected to run through the Peruvian Highlands from Cusco to Lake Titicaca and Arequipa. This train consists of 21 carriages, which Belmond owned and operated in Australia until 2003 and sold to PeruRail in 2016. The train was shipped from Australia to Peru where it is undergoing a renovation of its interiors to a luxury standard offering modern comfort, as well as updates to the mechanical systems. This will be South America's first luxury sleeper train and will accommodate up to 48 passengers.

Eastern & Oriental Express: During its operating season from September to April, the Eastern & Oriental Express offers a round trip each week between Singapore, Kuala Lumpur and Bangkok. The journey includes two or three nights on board and side trips to Kuala Kangsar in Malaysia and the River Kwai in Thailand. Some overnight trips are also made from Bangkok to Chiang Mai and elsewhere in Thailand and to Vientiane, Laos. Longer itineraries, up to six nights on board, are offered to places of historic, scenic and cultural interest in the region. Originally built in 1970, the 24 cars were substantially refurbished in an elegant Asian décor and fitted with modern facilities such as air conditioning and private bathrooms. The train is made up of sleeping cars, three restaurant cars, a bar car and an open air observation car and carries up to 82 passengers. The Eastern & Oriental Express is available for charter by private groups. Belmond manages the train and has a 25% shareholding in the owning company.

Management Strategies

As the foregoing indicates, Belmond has a global mix of luxury hotel and travel products that are geographically diverse and appeal to both high-end individual travelers as well as prominent meeting, incentive, and social groups. Individual travelers in 2016 made up approximately 72% of total hotel room nights, with meeting, social, and incentive groups accounting for the remaining 28%. Belmond’s properties are distinctive as well as luxurious and tend to attract guests prepared to pay higher rates for the travel experiences and high-qualityservice Belmond offers compared to its competitors.

Belmond benefits from long-term trends and developments favorably impacting the global hotel, travel and leisure markets, including growth trends in the luxury hotel market in many parts of the world, increased travel and leisure spending by consumers, favorable demographic trends in relevant age and income brackets of U.S., European and other populations, and increased online travel bookings. 

Belmond’s vision is to continue to be the consummate luxury experiential travel company, providing guests with a window into authentic, 'one-of-a-kind' experiences in some of the most unique destinations in the world. Belmond announced a strategic growth plan intended to grow its business by focusing on three key areas:

• Driving top-line growth and bottom-line results at the Company's existing businesses -- Belmond plans to continue owning or part-owning and operating most of its existing properties, which allows Belmond to develop each product's distinctive local character and to benefit from current cash flow and potential future gains on sale. Belmond considers its combined owner/operator role as efficient and consistent with the long-term nature of its assets. Self-management or management with equity interest has enabled Belmond to capture the economic benefits otherwise shared with a third-party manager, to control the operations, quality and expansion of the hotels, and to use its experience with market adjustments, price changes, expansions and renovations to improve cash flow and enhance asset values. The Company

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continues to emphasize increasing revenue and earnings at its established and recently opened properties, with a particular focus on:

◦ maximizing RevPAR while controlling costs associated with incremental revenue;

◦ upgrading core systems to drive greater demand, improve customer relationships and increase website conversion ratios;

◦ investing in capital improvements at existing hotels and expanding where land or space is available, in both cases when potential investment returns are relatively high and operating costs are low;

◦ putting a greater emphasis on margin improvements; and

◦ increasing the utilization of its trains and cruises by adding departures and, for PeruRail, expanding its contracted freight business.

• Continuing the Company's efforts to build brand awareness -- Many of Belmond’s individual properties, such as Belmond Hotel Cipriani, Belmond Grand Hotel Europe, Belmond Copacabana Palace, Belmond Mount Nelson Hotel and ‘21’ Club, have distinctive local character and strong brand identities. Prior to introducing the Belmond brand in 2014, the Company promoted its individual hotel properties and the Venice Simplon-Orient-Express train through the “Orient-Express" sub-brand. In 2014, the Company elected to migrate to more of a "hard-brand" strategy and now markets its collection under the Belmond brand. At the same time, the Company retained its long-term license agreement with SNCF, the French transportation company that owns the "Orient-Express" trademark for the Venice Simplon-Orient-Express train. With the decision to introduce the Belmond brand, the Company also entered into an agreement with SNCF to terminate (with effect from December 14, 2014) the "Orient-Express" license for hotel use, without any cost or penalty.

The revised brand and marketing strategy is intended to increase consumer recognition of the broad scope of the Company's unique collection of luxury hotels and travel experiences, thereby increasing repeat and multi-property visits and enhancing revenue growth, and to heighten awareness of the entire portfolio of individual properties among existing and potential new guests. Management also expects this approach will make Belmond more attractive to third-party owners thereby facilitating the strategy of expanding into third-party management of properties that complement Belmond's existing portfolio.

The Company has made important progress on increasing consumer and industry awareness of the Belmond brand in the approximately three years since its launch. Management believes that there is additional scope for expanding awareness and is focused on building the brand and gaining more market share within the luxury leisure brand landscape. In particular, the Company is focused on making Belmond "the brand of choice" for its specific niche by expanding brand training for employees in order to bring the brand to life for guests while on property, identifying and introducing signature programming that differentiates the Company from its competitors, and utilizing public relations and media opportunities to introduce new experiences while at the same time reinforcing the Belmond brand.

• Expanding the Company's global footprint -- As part of the strategic plan that the Company unveiled in 2016, Belmond identified global footprint expansion as a meaningful driver of the Company's long-term growth and value. Footprint expansion includes growing the Company's international portfolio through any or all of the following: acquisitions, long-term leases, management agreements -- with or without a related investment, franchise agreements, and construction or acquisition of new train or cruise businesses. Factors in Belmond's evaluation of a potential acquisition, lease, management or franchise opportunity include the property's fit within the Belmond brand and the Company's target geographic markets, as well as an assessment against certain Company's defined financial criteria, with a focus on maintaining conservative debt and leverage levels. In keeping with this conservative approach, the Company expects to partially finance larger acquisitions through the sale of select existing assets while at the same time seeking to retain long-term management of any disposed asset.

As a sizeable part of its footprint expansion strategy, the Company plans to pursue long-term contracts to manage distinctive luxury hotels owned by others principally on a fee basis. These contractual arrangements may include cash, loan or other investment, including key money, by Belmond in connection with renovating or converting a property to meet Belmond's standards and to align Belmond's interest as an operator with the owner. Management agreements are desirable to the Company in that they would typically be a less-capital-intensive manner of facilitating entry into new markets for Belmond. As owner of many unique and luxury properties that Belmond operates itself, Belmond believes it is well positioned to manage comparable hotels for others.

• Other strategic considerations -- In recent years, management executed on a strategy to reduce Belmond’s long-term debt position. A number of assets not considered key to Belmond’s portfolio of unique, high-valued properties were identified and sold with proceeds being used to reduce debt, re-invest in other properties, and more recently to repurchase the Company's class A common shares. In the last three years, Belmond sold its 50% ownership in the entity which owned

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Hotel Ritz by Belmond, Madrid, Spain, and the Inn at Perry Cabin by Belmond in Maryland for combined total proceeds of $84,189,000, and removed any debt or guarantees related to these properties from its consolidated balance sheets. See Note 4 to the Financial Statements. Management continues to review Belmond's portfolio to identify additional non-core assets and expects that any future asset sales would be encumbered by long-term management agreements for Belmond. See Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Marketing, Sales and Public Relations

Belmond invested $3,110,000 in enhanced promotional and marketing initiatives in 2016 and plans to invest approximately $3,000,000 during 2017 as phase three of its five year strategy to invest approximately $15,000,000 in support of the Belmond brand.

Belmond’s sales and marketing function is primarily based upon direct sales to consumers of travel (prioritizing strategic third-party travel agents, sales representatives and tour operators, and electronic channels such as the Internet and digital marketing), cross-selling to existing customers, and public relations. Belmond has its own corporate sales force located in 16 cities in the U.S., Brazil, Mexico, various European countries, Australia and Japan, and has appointed third-party sales representatives in ten additional cities in Asia and the Middle East. Belmond also has local sales staff responsible for the properties where they are based.

Belmond’s sales staff identify and train preferred travel industry and distribution partners, engage with group and corporate account representatives, and conduct marketing initiatives such as direct mailings, e-commerce, trade show participation and event sponsorship. Revenue is managed using sophisticated room rate and inventory tools. Belmond participates in a number of luxury travel partner programs, such as the “Fine Hotels & Resorts" and "Centurion Hotel Program", both operated by American Express, and the “Virtuoso” travel agent consortium. Belmond offers its top travel agents and other industry partners "by invitation only" participation in Belmond’s “Bellini Club” providing training courses, special commissions and sales support for all Belmond products worldwide.

Consumer advertising, websites and digital marketing are important direct sales and marketing tools for Belmond. Through its principal website (belmond.com), Belmond provides extensive descriptions and images of the products and guest activities in English and five other languages, in addition to bookings and brand wide promotions. Belmond operates other Internet special interest travel portals that direct customers to Belmond’s properties, and works with other selected electronic distribution channels.  Social media such as Facebook, Twitter, YouTube, Instagram and Pinterest are increasingly significant marketing tools.

Because repeat customers appreciate the consistent quality of Belmond’s hotels, trains and cruises, an important part of Belmond’s strategy is to promote Belmond properties through various cross-selling efforts to engage with Belmond's loyal customer base. These include gifts cards, "Belmond Now" digital magazine in-house directory, customer relationship management systems and other customer recognition programs, worldwide preferred travel agent programs, and direct communications with customers.

Belmond’s marketing strategy also focuses on public relations, which management believes is a highly cost-effective marketing tool for luxury properties. Because of the unique nature of Belmond’s properties, guests often hear about Belmond’s hotels and other travel products through word-of-mouth or published articles. Belmond has an in-house public relations office in London and representatives in 11 countries worldwide, including third-party public relations firms under contract, to promote its properties through targeted newspapers, general interest and travel magazines, and broadcast, online and other media.

Corporate Social Responsibility

Belmond is committed to the implementation of responsible business practices furthering the sustainability of tourism and seeks to ensure that its properties and corporate offices engage with their local communities and environments in a positive manner through their ongoing activities. Examples of these are as follows:

• Belmond has continued its association with the Sustainable Restaurant Association. The food and beverage operations of 39 of Belmond's properties have been assessed to measure and benchmark their sustainability credentials. Belmond is the first global luxury hospitality brand to have undertaken this third party testing. This testing will continue to inform Belmond's minimum food sustainability, environmental responsibility and ethical sourcing standards during the coming year.

• In Myanmar, the ship doctors of Belmond Road to Mandalay and Belmond Orcaella run community activities along the Ayeyarwady and Chindwin Rivers in a program dating back to 1995. These include a free clinic that treats thousands of people each year, the construction and long-term support of 25 schools, and irrigation and solar power projects in remote

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villages. 2017 sees the launch of the Myanmar Foundation, a UK-based registered charity which will facilitate donations to the program.

• In Russia, Belmond Grand Hotel Europe works with local orphanages and youth organizations to support those in need. The hotel supports a house in the SOS children's village outside of St. Petersburg for young people without families, where five children aged between 12 and 15 years old are currently being cared for. In addition, the hotel arranges educational tours of its premises for college students and organizes community activities for disadvantaged young people. In 2016, some 28 volunteers participated in a clean-up day, clearing refuse in a nearby forest.

• In the U.S., Belmond Charleston Place created and coordinates the Charleston Chefs’ “Feed the Need” Program in which local hotels, restaurants and caterers provide weekly meals in food shelters for up to 500 persons. The hotel has now introduced a "Teach the Need" program, teaching hospitality skills to at-risk high school students and helping them find employment. In 2015, it organized an auction that raised over $600,000 for those affected by the Emanuel AME Church tragedy. Now, following the closure of the city center's only budget supermarket, it is fund raising to provide bus transport for disadvantaged and elderly people to purchase food elsewhere.

• Also in the U.S., Belmond El Encanto is pursuing a number of community initiatives such as donating clothing, toys and other items to low-income families and local shelters. In addition, staff participate in charity races and volunteer as stewards. The hotel has sponsored disadvantaged children to travel to an island national park to learn about its ecosystem. The hotel's long-term environmental initiatives include water conservation and the introduction of moisture-resistant plants to its famous gardens.

• In Brazil, Belmond Copacabana Palace has continued to develop the sustainability and community programs it initiated in 2009 and the long-standing community programs it formalized in 2012. It now recycles more than 50% of its waste, uses 100% renewable energy, works with sustainable food and flower suppliers and supports Solar Meninos de Luz, a local children's philanthropic organization.

• Also in Brazil, Belmond Hotel das Cataratas is committed to environmental conservation programs including Projeto Carnivoros do Iguaçu, which has overseen a substantial rise in numbers of endangered animals such as pumas and jaguars within the surrounding national park. The hotel also sponsors a local young people's training program offering youth apprenticeships and work placements for disadvantaged young people. The hotel is committed to environmental conservation and ecological operating programs and was the first South American hotel to be certified for ISO14001– Sustainability and SA8000–Social Responsibility.

• Our Peru hotels and trains undertake a wide range of community and sustainability initiatives. These include support of local artisans and farmers who receive help to create products and grow crops that our Peru hotels and train purchase at fair trade prices. Belmond Palacio Nazarenas has developed an edible herb garden, Belmond Hotel Rio Sagrado a small orchard, and Belmond Sanctuary Lodge a small greenhouse -- all of which supply their kitchens. Community programs range from planting thousands of trees to clearing waste from riverbanks and beaches. Cultural initiatives include the provision of free train travel for disadvantaged children to Machu Picchu, community initiatives to improve safety along the train tracks, and a film-making program that records local people sharing local traditions and memories. One particular program, Cconamuro, helps train villagers in hospitality skills, enabling them to welcome our guests on cultural day visits that include lunch and the chance to discover aspects of local life.

• Our Italian hotels are active in a range of sustainability and community initiatives. Our two hotels in Sicily support the annual Taormina International Book Festival and related literary activities, have joined 150 children in a clean-up of nearby Isola Bella beach, and helped raise funds for a local hospital. Belmond Villa San Michele hosted a "dinner in the dark" in support of the Italian Union of the Blind and Partially Sighted, whose students served guests. In addition, staff form the hotel volunteered with Angeli del Bello to clean a public park in Florence. Belmond Hotel Cipriani continued its support of the Senegal village from which its Night Concierge hails. Staff raise funds for the village and also recently shipped a sea container of mattresses, appliances and other goods no longer needed by the hotel to the village.

• In the UK, Belmond Manoir aux Quat'Saisons supports local community organizations, schools and an animal sanctuary. It is an active member of the Sustainable Restaurant Association and is committed to sourcing local food wherever possible and to nurture and expand its organic gardens, compost waste and care for the environment by, for example, collecting waste kitchen oils and fats and sending them to a recycling plant to be converted to biofuel.

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• Belmond offers all full-time staff in its London office the opportunity to use up to 14 hours, or two working days, a year to participate in volunteer projects that benefit its local community. In 2016, more than 40 volunteers undertook gardening work at a local school in one of London's most disadvantaged areas and work at a community farm.

Industry Awards

Belmond has gained a worldwide reputation for quality and service in the luxury segment of the leisure and business travel markets.  Over the years, Belmond’s properties have won numerous national and international awards given by consumer or trade publications such as Condé Nast Traveller, Travel + Leisure, The Sunday Times (UK) and Forbes.com and by private subscription newsletters such as Andrew Harper’s Hideaway Report, or industry bodies such as TripAdvisor. The awards are based on opinion polls of the publications’ readers or the professional opinions of journalists or panels of experts. The awards are believed to influence consumer choice and are therefore highly prized.

Competition

Some of Belmond’s properties are located in areas with numerous competitors. Competition for guests in the hospitality industry is based generally on the convenience of location, the quality of the property and services offered, room rates and menu prices, the range and quality of food services and amenities offered, types of cuisine, and reputation and name recognition.

Belmond’s strategy is to acquire, invest or manage only hotels which have special locations and distinctive character, offering unique travel experiences. Many are in areas with interesting local history or high entry barriers because of zoning restrictions.  Belmond builds its competitive advantage by offering high quality service and cuisine, usually with a local flavor. Typically, therefore, Belmond competes by providing a special combination of location, character, cuisine, service and experiential activities rather than relying on price competition.

Belmond’s luxury tourist trains have no direct competitors at present. Other passenger trains operate on the same or similar routes, including the Cusco-Machu Picchu line of PeruRail, but management believes Belmond’s trains and onboard service are unique and of such superior quality that guests consider a Belmond train journey more of a luxury experience and an end in itself than merely a means of transport.

Employees

Belmond currently employs approximately 8,600 full-time-equivalent persons.  Approximately 6,000 persons are employed in the hotels, 2,500 in the trains and cruises business, and 116 in central administration, sales and marketing and other activities.  Management believes that Belmond’s ongoing labor relations are satisfactory. Through its various training and other human resources programs, Belmond seeks to attract, develop and retain top employees providing authentic local experiences to guests and to promote internal candidates for leadership positions.

Government Regulation

Belmond and its properties are subject to numerous laws and government regulations such as those relating to the preparation and sale of food and beverages, liquor service, health and safety of premises and employees, data privacy, employee relationships and welfare, environmental matters, waste and hazardous substance handling and disposal, and planning and zoning rules.

ITEM 1A.       Risk Factors

Belmond’s business is subject to various risks, including those described below. Investors should carefully consider the “Risk Factors” below. These are separated into three general groups:

• risks of Belmond’s business,

• risks relating to Belmond’s financial condition and results of operations, and

• risks of investing in class A common shares.

The risks described below are those that management considers to be the most significant for purposes of Item 503(c) of Regulation S-K.

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If any of these risks occurs, Belmond’s business, prospects, financial condition, results of operations and/or cash flows could be materially adversely affected. When Belmond states below that a risk may have a material adverse effect, this means the risk may have one or more of these effects. In that case, the market price of the class A common shares could decline.

Risks of Belmond’s Business

Belmond’s operations are subject to adverse factors generally encountered in the international lodging, hospitality and travel industries.

In addition to the specific conditions, risks and uncertainties discussed in the risk factors below and under Item 7—Management's Discussion and Analysis, these adverse factors include:

• cyclical downturns arising from changes in economic conditions and general business activities in the United States and European and other countries which impact levels of travel and demand for travel products,

• rising travel costs such as increased air travel fares and higher fuel costs, and reduced capacities of airlines and other transport services to specific destinations,

• political instability of the governments of some countries where Belmond’s properties are located, resulting in depressed demand,

• less disposable income of consumers and the traveling public,

• dependence on varying levels of tourism, business travel and corporate entertainment,

• changes in popular travel patterns,

• competition from other hotels, trains, cruises and leisure time activities,

• periodic local oversupply of guest accommodation in specific locations, which may adversely affect occupancy and actual room rates achieved,

• increases in operating costs at Belmond’s properties due to inflation and other factors which may not be offset by increased revenues,

• economic and political conditions affecting market demand for travel products, including recessions, civil disorder, diplomatic relations, and acts or threats of terrorism,

• foreign exchange rate movements causing fluctuations in reported revenues, costs and earnings and impacting demand for Belmond's properties,

• failure to comply with applicable anti-corruption laws or trade sanctions, exposing Belmond to claims for damages, financial penalties and reputational harm,

• restrictive changes in laws and regulations applicable to zoning and land use, labor and employment, health, safety and the environment, and related governmental and regulatory action,

• costs and administrative burdens associated with compliance with applicable laws and regulations relating to privacy and customer and employee personal data protection, licensing, labor and employment, and other operating matters,

• changing national and local governmental tax laws and regulations, which may increase the taxes Belmond is required to pay,

• expropriation or nationalization of properties by foreign governments, and limitations on repatriation of local earnings or withdrawal of local investment,

• availability and cost of capital to fund construction, renovations and investments,

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• adverse weather conditions such as severe storms that may temporarily impact demand, destructive forces like fire or flooding that may result in temporary closure of properties, water levels that may impact the Company's cruise operations, or landslides or engineering works that may impact train operations,

• reduction in domestic or international travel and demand for Belmond’s properties due to actual or threatened acts of terrorism or war, or actual or threatened outbreak of contagious disease, and heightened travel security measures and restrictions instituted in response to these events,

• interference with customer travel due to accidents or industrial action, increased transportation and fuel costs, and natural disasters,

• with regard to Belmond's hotel management agreements, compliance by Belmond as manager with its contractual performance and financial obligations, maintenance of satisfactory relationships between Belmond as manager and the property owner, and the property owner's ability to meet financial requirements in the contracts such as necessary capital expenditure,

• seasonality, in that many of Belmond’s hotels and tourist trains are located in the northern hemisphere where they operate at low revenue or close during the winter months, and

• reliance on third parties to haul the Belmond owned carriages comprising the Company's luxury train businesses.

The effects of many of these factors vary among Belmond’s hotels and other properties because of their geographic diversity. The global economic downturn in 2008 and 2009 preceded by the shock of terrorist attacks and resulting public concerns about travel safety, continued terrorist attacks, regional conflicts in Iraq, Afghanistan, Ukraine and Crimea, as well as in Thailandand other parts of the world, and the threatened flu and Ebola epidemics, and the outbreak of the Zika virus, had and may have, varying adverse effects on Belmond's results of operations.

If revenue decreases at Belmond’s properties, its expenses may not decrease at the same rate, thereby adversely affecting Belmond’s profitability and cash flow.

Ownership and operation of Belmond’s properties involve many relatively fixed expenses such as personnel costs, interest, rent, property taxes, insurance and utilities. If revenue declines when demand weakens, Belmond may not be able to reduce these expenses to the same degree to preserve profitability.

The hospitality industry is highly competitive, both for customers and for acquisitions of new properties.

Some of Belmond’s properties are located in areas where there are numerous competitors seeking to attract customers, particularly in city centers and resort locations. Competitive factors in the hospitality industry include:

• convenience of location,

• the quality of the physical property and services offered,

• room rates and menu prices,

• the range and quality of food services and amenities offered,

• types of cuisine, and

• reputation and name recognition.

New or existing competitors could significantly lower rates or offer greater conveniences, services or amenities, or significantly expand, improve or introduce new facilities and amenities in the markets where Belmond operates, thereby adversely affecting profitability. Also, demographic, geographic or other changes in one or more of Belmond’s markets could impact the convenience or desirability of its hotels and so could adversely affect their operations and Belmond's local market share.

Belmond competes for hotel acquisition and management agreement opportunities with others such as real estate investors and hotel operators. These competitors may be prepared to accept lower levels of financial return or a higher level of financial risk than Belmond can prudently manage. This competition may have the effect of reducing the number of suitable acquisition, lease

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and management agreement opportunities offered to Belmond or on which it could successfully bid, and the effect of increasing Belmond's costs or reducing its operating margins because the bargaining power of property owners seeking to sell or to enter into management agreements is increased.

The hospitality industry is heavily regulated, including with respect to food and beverage sales, employee relations, development and construction, and environmental matters, and compliance with these laws and regulations and with future changes to them could reduce profitability of properties that Belmond owns, leases or manages.

Belmond’s various properties are subject to numerous laws and government regulations, including those relating to the preparation and sale of food and beverages, liquor service, and health and safety of premises. The properties are also subject to laws governing Belmond’s relationship with employees in such areas as minimum wage and maximum working hours, overtime, working conditions, health and safety, hiring and firing employees and work permits.

The success of renovating and expanding existing properties depends upon obtaining necessary construction permits, approvals or zoning variances from local authorities. Failure to obtain or delay in obtaining these permits could adversely affect Belmond’s strategy of increasing revenues and earnings through renovation and expansion of existing properties.

Belmond is also subject to laws and regulations relating to the environment and the handling of hazardous substances that may impose or create significant potential environmental liabilities, even in situations where the environmental problem or violation occurred at a property before Belmond acquired it or without Belmond’s knowledge. Environmental laws may also impose liability for improper handling or disposal of hazardous substances or improper management of certain hazardous material which might be present at Belmond properties, such as asbestos or lead-based paint. Belmond’s trains and cruises must comply with environmental regulation of air emissions, wastewater discharges and fueling. Existing environmental laws and regulations may be revised or new laws and regulations related to global climate change, air quality, hazardous substances, wastes, or other environmental and health concerns may be adopted or become applicable to Belmond.

Although Belmond does not currently anticipate that the costs of complying with environmental laws will materially adversely affect its businesses, Belmond cannot assure that it will not incur material costs or liabilities in the future, due to the discovery of new facts or conditions, the occurrence of new releases of hazardous materials, or a change in environmental laws.

Belmond could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and similar anti-corruption laws.

Belmond's business operations are subject to anti-corruption laws and regulations, including the U.S. Foreign Corrupt Practices Act (“FCPA”) and the U.K. Bribery Act ("UKBA"). The FCPA, UKBA and other anti-corruption laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to government officials and others for the purpose of obtaining or retaining business. Belmond operates in many parts of the world that have experienced governmental corruption to some degree and, in certain circumstances, strict compliance with anti-corruption laws may conflict with local customs and practices. Belmond trains its employees in its Code of Conduct and Anti-Corruption Policy and Procedures and also requires its third-party business partners and agents and others who work with Belmond or on its behalf to comply with Belmond's anti-corruption policies. Belmond also has procedures and controls in place to monitor internal and external compliance. Belmond cannot provide assurance, however, that its internal controls and procedures will adequately protect against reckless or criminal acts committed by employees or third parties with whom Belmond works. If Belmond found, or it was alleged, that Belmond's employees or third parties with whom it works had engaged in such acts, Belmond's business could be disrupted and Belmond could be subject to criminal or civil penalties which could have a material adverse effect on Belmond's results of operations, financial condition and cash flows.

Belmond’s acquisition, expansion and development strategy may be less successful than expected and, therefore, Belmond's growth may be limited.

Belmond intends to increase its revenues and earnings in the long term by acquiring new properties, managing additional properties under contract, and expanding existing properties. The ability to pursue new growth opportunities successfully will depend on management’s ability to:

• identify properties suitable for acquisition, management and expansion,

• negotiate purchases or construction on commercially reasonable terms or successfully negotiate management agreements of properties Belmond does not own or in which it has only a non-controlling interest,

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• obtain the necessary financing and government permits or approvals,

• build on schedule and with minimum disruption to guests, and

• integrate new properties into Belmond’s operations.

Also, the acquisition and/or management of properties in new locations may present operating and marketing challenges that are different from those experienced at Belmond’s existing locations. Belmond can provide no assurance that management will succeed in this growth strategy.

Successful new project development and major expansions depend on timely completion within budget and on satisfactory market conditions. Risks that could affect a project include:

• construction delays or cost overruns that may increase project costs,

• delay or denial of zoning, occupancy and other required government permits and authorizations,

• write-off of development costs incurred for projects that are not pursued to completion,

• natural disasters such as earthquakes, hurricanes, floods or fires,

• defects in design or construction that may result in additional costs to remedy, or that require all or a portion of a property to be closed during the period needed to rectify the situation,

• inability to raise capital to fund a project because of poor economic or financial conditions,

• claims and disputes between Belmond and other contracting parties resulting in delay, monetary loss or project termination,

• governmental restrictions on the nature or size of a project or timing of completion,

• changes in market conditions such as oversupply that may affect a project's profitability, and

• discovery or identification of environmental conditions that could require unanticipated studies, cleanups, approvals, increased costs, time delays or even project termination.

Occurrence of any of these events could adversely affect the profitability of planned expansions and new developments.

Belmond may be unable to obtain the necessary additional capital to finance the growth of its business.

The acquisition, expansion and development of leisure properties, as well as the ongoing renovations, refurbishments and improvements required to maintain or upgrade newly acquired, expanded or existing properties, are capital intensive. The availability of internally generated cash flow, future borrowings and access to equity capital markets to fund these acquisitions, expansions and projects depend on prevailing market conditions and the acceptability of available financing terms. Belmond can give no assurance that future borrowings or capital raising will be available to Belmond, or available on acceptable terms, in an amount sufficient to fund its needs. Failure to make investments necessary to maintain or improve Belmond's properties could adversely affect the performance of Belmond's properties.

Future equity financings may be dilutive to the existing holders of common shares. Future debt financings may require restrictive covenants that would limit Belmond’s flexibility in operating its business. See also “Risks Relating to Belmond’s Financial Condition and Results of Operations” and "Risks of Investing in Class A Common Shares" below.

Belmond’s operations may be adversely affected by extreme weather conditions and the impact of natural disasters, and insurance may not fully cover these and other risks.

Belmond operates properties in many locations, each of which is subject to local weather patterns affecting the properties and customer travel. As Belmond’s revenues and operating performance are dependent on the revenues and performance of individual properties, extreme weather or other environmental conditions from time to time can have a major adverse impact upon individual properties or particular regions, resulting in temporary loss of revenue or even closure while repairs are made. Furthermore,

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depending on the location and configuration of certain Belmond properties, such as along coasts, lagoons or rivers, they may be subject to possible adverse consequences of global climate change, including water levels or increased extreme weather patterns.

Belmond carries property, liability, hotel business interruption and other kinds of insurance in amounts management deems reasonably adequate, but claims may exceed the insurance limits or be outside the scope of coverage. Also, insurance against some risks may not be available to Belmond on commercially reasonable terms, or available at all, requiring Belmond to self-insure against possible loss.

If the relationships between Belmond and its employees were to deteriorate, Belmond may be faced with labor shortages or stoppages, which would adversely affect the ability to operate its properties and could cause reputational harm to Belmond.

Belmond’s relations with its employees in various countries could deteriorate due to disputes related to, among other things, wage or benefit levels, working conditions or management’s response to changes in government regulation of workers and the workplace.  Operations rely heavily on employees to provide a high level of personal service, and any labor shortage or stoppage caused by poor relations with employees, including unionized labor, could adversely affect the ability to provide those services, which could reduce occupancy and revenue and tarnish Belmond’s reputation.

Belmond’s owned hotels are subject to risks generally incidental to the ownership and operation of commercial real estate and often beyond Belmond's control.

These include:

• fluctuating values of commercial real estate and potential asset value impairments due to operating performance falling short of expectation or other triggering events,

• changes in national, regional and local economic and political conditions,

• changes in interest rates and the availability, cost and terms of financing,

• the impact of present or future government legislation and regulation (including environmental and eminent domain laws),

• the ongoing need for capital improvements to maintain or upgrade properties,

• potential discovery of environmental conditions associated with prior or present operations on site or nearby, and proper management and disposal of wastes and hazardous substances,

• changes in property taxes and operating expenses,

• the potential for uninsured or underinsured losses, and

• limited ability to reduce the relatively high fixed costs of operating owned commercial real estate if revenue declines.

Belmond continues to review its portfolio to identify properties that are non-core to its business and expects any future asset sales would be encumbered by long-term management agreements for Belmond. In an unfavorable commercial real estate market, Belmond may be unable to sell properties at values it is seeking, particularly during an economic downturn and weakness in credit markets, or sell them at the pace Belmond had planned, or encumbered by the long-term management agreements it is seeking.

Loss, dilution or infringement of Belmond’s existing brand names or the failure to develop successful new brand names could adversely affect Belmond's business.

In the competitive hotel and leisure industry in which Belmond operates, trademarks and brand names are important in the marketing, promotion and revenue generation of Belmond’s properties. Belmond has a large number of trademarks and brand names and expends resources each year on their surveillance, registration and protection. Belmond may also introduce new brand names in the future. Belmond’s future growth is dependent in part on increasing and developing its brand identities and customers' acceptance of those brands. From time to time, Belmond incurs costs in seeking to protect its intellectual property and in doing so, runs the risk that a court may not uphold its rights. The loss, dilution or infringement of any of Belmond’s brand identities, including any

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material losses or infringements of its current rights to the "Cipriani" brand, could have an adverse effect on its business, results of operations and financial condition.

Belmond operates the Venice Simplon-Orient-Express train under a license of that trademark from SNCF. Termination of that license could have an adverse impact on Belmond's business.

Failures in Belmond’s information technology systems or in protecting the integrity of customer, employee and business data could reduce revenue and earnings and result in loss or in reputational harm.

Belmond's business involves the processing, use, storage and transmission of personal information regarding customers, employees and business partners for various business purposes, including marketing and promotions. Belmond is subject to numerous laws and regulations designed to protect personal financial and other information relating to customers, employees and the business, and has established policies and procedures to help protect the privacy and security of this information. These laws and regulations are complex and evolving and may, on occasion, be inconsistent from one jurisdiction to another. Compliance may increase Belmond's operating costs or limit Belmond's ability to market its properties and services. The EU General Data Protection Regulation will become law in May 2018, increasing certain obligations on, and limiting certain uses by, businesses of the personal data of their customers, employees and business partners. The penalties for violation of this new law have increased significantly, with a maximum fine of 4% of group revenue or €20 million, whichever is higher, for the most serious breaches. The impact of Brexit (see "Risks Relating to Belmond's Financial Condition and Results of Operations—Economic downturns and disruptions in the financial markets could adversely affect Belmond's financial condition and results of operations" below) could increase the Company's regulatory obligations and/or require the Company to amend its processes and controls for the use, transfer and processing of personal data.

Belmond depends on its own and third party information technology networks and systems to process, transmit and store company and personal information, and to communicate among its various locations around the world, including reservation systems, property management systems, customer and employee databases, administrative systems, and third-party vendor systems. While Belmond relies on the security of these networks and systems to protect the personal and business information of the Company, customers, employees and business partners, they may be vulnerable to threats such as system, network or Internet failures, security breaches, computer hacking or business disruption, viruses or malicious software programs, employee error, negligence, fraud or misuse, or other unauthorized attempts to access, modify or delete Belmond's company and personal information. Although Belmond has taken steps to address these concerns by implementing network security and internal controls, there can be no assurance that a system failure, unauthorized access, or other compromise will not occur. While from time to time attempts are made to access the Company's network, we are not aware of any instance in which these attempts have resulted in any material release of information, degradation or disruption to the Company's network and information systems.

Any compromise of Belmond's networks or systems, public disclosure or loss of company or personal information, non-compliance with legal or contractual obligations regarding personal information, or a violation of a privacy or security policy pertaining to personal information could result in disruption to Belmond's operations; loss of revenue or property; damage to Belmond's reputation and loss of confidence of customers, employees and business partners; legal claims or proceedings, liability under laws that protect personal information, regulatory penalties, monetary damages, regulatory enforcement actions, fines, and/or criminal or civil prosecution in one or more jurisdictions; and could result in subjecting Belmond to additional regulatory scrutiny, or additional costs and liabilities which could have a material adverse effect Belmond's business, operations or financial condition.

Some Belmond properties are geographically concentrated in countries where national economic downturns, political events or other changing conditions beyond Belmond’s control could disproportionately affect Belmond’s business.

While Belmond’s geographic diversification in 23 countries lessens the dependence of its results of operations on any particular region, Belmond owns seven hotels in Italy and one hotel in Peru and its 50%/50% joint ventures in Peru operate a further four hotels as well as PeruRail. Due to this concentration of properties in these two countries, Belmond’s performance and profitability are more exposed to national events or conditions in Italy and Peru than other countries where Belmond operates, such as:

• changing local economic and competitive conditions,

• weakening local currencies compared to the U.S. dollar,

• natural and other disasters,

• new government laws and regulations, and

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• changes in government administrations.

Changing economic, political and regulatory developments in any of the countries in which the Company operates, including in the U.K. in respect of its expected withdrawal from the EU (commonly referred to as "Brexit") and in the U.S. in respect of its evolving trade, tax and immigrations policies, along with the evolving political situation in Ukraine and Brazil, could adversely affect the Company's business and results of operations.

Belmond may be unable to manage effectively the risks associated with its joint venture investments, which may adversely impact the operations and profitability of those joint ventures.

Four of Belmond’s hotels and two of its train operations are owned by joint venture companies in which Belmond has an investment of 50% or less and shares control of at least some significant aspects of their businesses, such as expenditure for capital improvements. These joint venture investments of Belmond involve risks different from 100% ownership because Belmond’s partners:

• may be unable to meet their financial obligations to the joint venture,

• may have business interests inconsistent with those of Belmond or act contrary to Belmond’s objectives and policies,

• may cause properties to incur unplanned liabilities or commitments, or

• may take actions binding on the joint venture without Belmond’s consent or that otherwise impair Belmond’s operation of the business.

If any of these events occurs, the joint ventures may be subjected to additional risk, and Belmond’s operations could be adversely affected because it may have limited ability to rectify resulting problems within the joint venture and even to dispose of its joint venture investment. Also, disputes with joint venture partners may result in litigation costly to Belmond.

Risks Relating to Belmond’s Financial Condition and Results of Operations

Economic downturns and disruption in the financial markets could adversely affect Belmond’s financial condition and results of operations.

Financial markets in the United States, Europe and Asia experienced significant disruption in 2008 and 2009, including volatility in securities prices and diminished liquidity and credit availability. In addition, the economic slowdown during this period in the United States and other countries weakened consumer confidence and led to significant reductions in the amounts persons and businesses spent on travel, hotels, dining and entertainment. Largely as a result, Belmond experienced pressure on pricing, reduced occupancy at its properties, and fewer customers from traditional markets for Belmond’s hotels and other travel products.  Belmond’s consolidated revenue and earnings from continuing operations declined. Although revenue has since increased, Belmond incurred losses or reduced earnings in 2010 and later years due mainly to higher costs and impairment charges.

While the global economy has improved since the 2008-2009 recession, if the recovery slows or adverse economic conditions recur, Belmond’s future revenue, profitability and cash flow from operations could decrease and its liquidity and financial condition, including Belmond’s ability to comply with financial covenants in its loan facilities, could be adversely impacted and its future growth plans curtailed.

Belmond has nine hotels, the Venice Simplon-Orient-Express train and the Belmond Afloat in France cruise business in Continental Europe. If uncertainty regarding euro-zone debt recurs and measures taken by European governments contribute to weakness of national economies, financial markets could experience disruption and consumer confidence could decline, resulting in less demand for these properties and negatively impacting Belmond's results of operations and financial condition.

On June 23, 2016, the U.K. held a referendum in which voters approved an exit from the EU. As a result of the referendum, the British government has indicated that it will begin negotiating the terms of the U.K.'s future relationship with the EU and that it intends to serve the notice to effect the departure of the U.K. from the EU during March 2017. This process is expected to take two years to complete, but could take longer, depending on negotiations with the remaining EU Member States. Although it is unknown what the final Brexit terms will be, it is possible that there will be increased regulatory complexities and an impact on exchange rates, which may adversely affect our operations and financial results. In addition, while we believe it is too early to assess the full impact on the Company of the U.K.'s decision to leave the EU, a weaker pound or British economy could impact the travel preferences of the Company's guests who originate from the U.K. and could affect the operations and financial results

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at those properties that have a significant proportion of British visitors, such as Belmond Reid's Palace, Belmond La Residencia, the Italian properties and the Company's U.K. businesses. If as a consequence of Brexit, visas are introduced as a requirement for EU nationals to work in the U.K. (or for U.K. nationals to work in the EU), this could adversely affect the Company's ability to attract and retain high-caliber staff. In the U.S., evolving trade, tax and immigration policies could adversely affect the Company's business and results of operations.

Financial uncertainty and economic weakness identified in the previous risk factor could adversely impact Belmond’s liquidity and financial condition, in particular Belmond’s ability to refinance debt or raise additional funds for its cash requirements for working capital, commitments and debt service.

During the year ending December 31, 2017, Belmond will have $5,284,000 of scheduled debt repayments including capital lease payments and debt held by consolidated variable interest entities. In 2018, Belmond will have $5,286,000 of scheduled debt repayments including capital lease payments and debt held by consolidated variable interest entities. Belmond’s capital commitments at December 31, 2016 amounted to $7,772,000.

Belmond expects to fund its working capital requirements, debt service and capital expenditure commitments for the foreseeable future from operating cash flow, available committed borrowing facilities, issuing new debt or equity securities, rescheduling loan repayments or capital commitments, and disposing of non-core assets. See “Liquidity and Capital Resources” in Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations. Belmond can give no assurance, however, that additional sources of financing for its unfunded commitments will be available on commercially acceptable terms, or available at all, or that Belmond will be able to refinance maturing debt or to reschedule loan repayments or capital commitments, or that other cash-saving steps management may take to enhance Belmond’s liquidity and capital position will bridge any shortfall. If additional sources of financing are unavailable, including because of possible future breach of loan financial covenants, Belmond may be unable to fund its cash requirements for working capital, commitments and debt service.

Covenants in Belmond’s financing agreements could be breached or could limit management’s discretion in operating Belmond’s businesses, causing Belmond to make less advantageous business decisions.

Belmond recognizes the risk that a property-specific or group consolidated loan covenant could be breached. Belmond regularly prepares cash flow projections which are used to forecast covenant compliance under all loan facilities. If there is a likelihood of potential non-compliance with a covenant, Belmond takes proactive steps to meet with the lenders to seek an amendment to, or a waiver of, the financial covenant at risk. Obtaining an amendment or waiver may result in an increase in bank fees or borrowing costs, or may not be obtainable at all. If a covenant breach occurred in a material loan facility and Belmond was unable to agree with its lenders how the particular financial covenant should be amended or how the breach could be cured or waived, Belmond’s liquidity would be materially adversely affected. The revolving credit facility which is part of the $657,000,000 credit facility described above contains covenants regarding the Company's net leverage ratio and interest coverage ratio. The term loan portion of that facility is subject to cross-acceleration with the revolving facility. Therefore, if the Company were to breach either of these covenants, the entire facility could be accelerated and the lenders could foreclose on substantially all of the assets owned by the Company. In addition, the negative covenants in the credit facility place restrictions on the Company's ability to incur additional debt, to effect mergers and assets sales, and to pay dividends or repurchase shares. These covenants may limit the options available should management determine that the Company has insufficient liquidity.

In order to assure that Belmond has sufficient liquidity in the future, Belmond’s cash flow projections and available funds are discussed with the Company’s board of directors and Belmond’s advisors to consider the most appropriate way to develop Belmond’s capital structure and generate additional sources of liquidity. The options available to Belmond will depend on the current economic and financial environment and Belmond’s continued compliance with financial covenants. Options currently available to Belmond include increasing the leverage on certain under-leveraged assets, issuing equity or debt instruments and disposing of non-core assets.

Belmond can give no assurance that its lenders would agree to modify or waive any affected covenant, which could impact Belmond’s ability to fund its cash requirements for working capital, commitments and debt service and could cause an event of default under any affected loan facility.

Belmond’s substantial indebtedness could adversely affect its financial condition.

Belmond has a large amount of debt in its capital structure and may incur additional debt from time to time. As of December 31, 2016, Belmond’s consolidated long-term indebtedness was $602,102,000 (including the current portion and the long-term indebtedness of Belmond’s consolidated variable interest entities of $113,098,000). This substantial indebtedness could:

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• require Belmond to dedicate much of its cash flow from operations to debt service payments, and so reduce the availability of cash flow to fund working capital, capital expenditures, product and service development and other general corporate purposes,

• limit Belmond’s ability to obtain additional financing for its business or to repay or refinance its existing indebtedness on satisfactory terms,

• increase Belmond’s vulnerability to adverse economic and industry conditions, including the seasonality of some of Belmond’s activities, or

• limit Belmond’s flexibility in planning for, or reacting to, changes in its business and industry as well as the economy generally.

Belmond’s failure to repay indebtedness when due may result in a default under that indebtedness and cause cross-defaults under other Belmond indebtedness. See the risk factor immediately above.

Increases in interest rates may increase Belmond’s interest payment obligations under its existing floating rate debt, and refinanced debt may have higher interest rates than the debt refinanced.

After taking into account Belmond’s fixed interest rate swaps, approximately 52% of Belmond’s consolidated long-term debt at December 31, 2016 bears interest that fluctuates with prevailing interest rates, so that any rate increases may increase Belmond’s interest payment obligations. From time to time, Belmond enters into hedging transactions in order to manage its floating interest rate exposure, but Belmond can give no assurance that those hedges will lessen the impact on Belmond of rising interest rates. Also, as Belmond refinances its long-term debt with new debt, the interest payable on the new debt may be at a higher rate than the debt refinanced.

Fluctuations in foreign currency exchange rates may have a material adverse effect on Belmond’s financial condition and operating results.

Substantial portions of Belmond’s revenue and expenses are denominated in non-U.S. currencies such as European euros, British pounds sterling, Russian rubles, South African rand, Peruvian nuevos soles, Botswana pula, Brazilian reals, Mexican pesos and various Southeast Asian currencies. In addition, Belmond buys assets and incurs liabilities in these foreign currencies. Foreign exchange rate fluctuations may have a material adverse effect on Belmond’s financial statements. Belmond’s financial statements are presented in U.S. dollars and can be impacted by foreign exchange fluctuations through both:

• translation risk, which is the risk that the financial statements for a particular period or as of a certain date depend on the prevailing exchange rates of the various currencies against the U.S. dollar,

• transaction risk, which is the risk associated with changes in exchange rates between the time when a transaction is initially recorded and when it is ultimately settled, and

• economic risk, which is the risk that the currency of costs and liabilities does not move in line with the currency of revenue and assets, which fluctuations may adversely affect Belmond’s operating margins.

Belmond is subject to accounting regulations and uses certain accounting estimates and judgments that may differ significantly from actual results.

Implementation of existing and future standards and rules of the U.S. Financial Accounting Standards Board (“FASB”) or other regulatory bodies could affect the presentation of Belmond’s financial statements and related disclosures. Future regulatory requirements could significantly change Belmond’s current accounting practices and disclosures. These changes in the presentation of Belmond’s financial statements and related disclosures could change an investor’s interpretation or perception of Belmond’s financial position and results of operations.

Belmond uses many methods, estimates and judgments in applying its accounting policies. By their nature, these are subject to substantial risks, uncertainties and assumptions, and factors may arise over time that lead Belmond to change its methods, estimates and judgments which could significantly affect the presentation of Belmond’s results of operations.

As an example of these estimates and judgments, Belmond evaluates goodwill at least annually, or when triggering events or changes in circumstances, such as adverse changes in the industry or economic trends or an underperformance relative to historical

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or projected future operating results, indicate the carrying value may not be recoverable. There were no goodwill impairment charges in 2016 but the Company continues to monitor goodwill balances for future potential impairment (see Note 8 to the Financial Statements). Belmond’s impairment analysis incorporates various assumptions and uncertainties that management believes are reasonable and supportable considering all available evidence, such as the future cash flows of the business, future growth rates and the related discount rates. However, these assumptions and uncertainties are, by their very nature, highly judgmental. Belmond cannot guarantee that its business will achieve the forecasted results which have been included in its impairment analysis. If Belmond is unable to meet these assumptions in future reporting periods, it may be required to record a charge for goodwill impairment losses.

Risks of Investing in Class A Common Shares

The price of the class A common shares may fluctuate significantly, which may make it difficult for shareholders to sell the class A common shares when they want or at desired prices.

The price of the class A shares trading on the NYSE constantly fluctuates, and Belmond management expects that the market price of the class A shares will continue to do so. Holders of class A shares will be subject to the risk of volatility and depressed prices.

The price of class A shares can fluctuate as a result of a variety of factors, many of which are beyond Belmond’s control. These factors include:

• quarterly variations in operating results,

• operating results that vary from the expectations of management, securities analysts and investors,

• changes in expectations as to future financial performance, including financial estimates by securities analysts and investors,

• developments generally affecting Belmond’s business or the hospitality industry,

• market speculation about a potential acquisition of Belmond or all or part of its business,

• announcements by Belmond or its competitors of significant contracts, acquisitions, joint ventures or capital commitments,

• announcements of significant claims or proceedings against Belmond,

• future sales of equity or equity-linked securities including by holders of large positions in the outstanding class A shares, and

• general domestic and international economic and political conditions.

In addition, the stock market in general can experience volatility that is often unrelated to the operating performance of a particular company. This volatility can arise, for example, because of disruption in capital markets and contraction of credit availability, and can be significant. These broad market fluctuations may adversely affect the market price of the class A shares.

The Company is not restricted from issuing additional class A or class B common shares, and any sales could negatively affect the trading price and book value of the class A common shares outstanding.

The Company may in its discretion sell newly issued class A or B common shares from time to time in the future, subject to compliance with certain procedural requirements of the NYSE relating to the class A common shares. There can be no assurance that the Company will not make significant sales of class A or B common shares in public offerings or private placements to raise capital, for funding future acquisitions, in employee equity compensation programs or for other corporate purposes. Any sales could materially and adversely affect the trading price of the class A shares outstanding or could result in dilution of the ownership interests of existing shareholders.

A subsidiary of the Company, which has two Company directors on its board of directors, may control the outcome of most matters submitted to a vote of the Company’s shareholders.

A wholly-owned subsidiary of the Company, Belmond Holdings 1 Ltd. (“Holdings”), currently holds all 18,044,478 outstanding class B common shares in the Company representing about 64% of the combined voting power of outstanding class A and B

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common shares for most matters submitted to a vote of shareholders, and the directors and officers of the Company hold class A shares representing an additional approximate 0.5% of the combined voting power. In general, holders of class A common shares and holders of class B common shares vote together as a single class, with holders of class A shares having one-tenth of one vote per share and holders of class B shares having one vote per share. Therefore, as long as the number of outstanding class B shares exceeds one-tenth the number of outstanding class A shares, Holdings could control the outcome of most matters submitted to a vote of the shareholders.

Under Bermuda law, common shares of the Company owned by Holdings are outstanding and may be voted by Holdings. The manner in which Holdings votes its shares is determined by the four directors of Holdings, two of whom, John D. Campbell and Mitchell C. Hochberg, are also directors of the Company, consistent with the exercise by those directors of their fiduciary duties to Holdings. Those directors, should they choose to act together, will be able to control substantially all matters affecting the Company, and to block a number of matters relating to any potential change of control of the Company. See Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Certain institutional shareholders representing two hedge fund groups challenged the Company’s corporate governance structure as it relates to the ownership and voting of class B common shares, including by proposing shareholder resolutions to amend the Company’s bye-laws to treat the class B shares as “treasury shares” with no voting rights and to cancel the class B shares. Those resolutions were rejected at a special general meeting of shareholders of the Company in October 2008 by a majority of the votes of the outstanding class A and class B common shares, voting together as a single class. Following the defeat of the resolutions at the special general meeting, these shareholders filed a petition in the Supreme Court of Bermuda in January 2009 against the Company, Holdings and certain of the Company’s directors seeking similar and related relief, including a declaration that the Company holding or voting class B shares, directly or indirectly, was unlawful and an order restraining Holdings from exercising its voting rights attached to the class B shares. After a trial on preliminary issues relating to the legality of the holding of class B shares in the Company by Holdings, the Court ruled in June 2010 that it is lawful for Holdings to hold and exercise voting rights in respect of class B shares in the Company held by Holdings and struck out the petition in its entirety. The Court also awarded the respondents their defense costs incurred in the proceedings. The foregoing description of the Court’s judgment does not purport to be complete and is qualified in its entirety by reference to the judgment, which the Company filed as Exhibit 99.1 to its Current Report on Form 8-K dated June 1, 2010 and is incorporated herein by reference.

The corporate governance structure of the Company, with dual class A and B common shares and ownership and voting of the class B shares by Holdings, has been analyzed by legal counsel, and the Company’s board of directors and management believe that the structure is valid under Bermuda law. The judgment of the Bermuda Supreme Court in June 2010 confirms this belief.  The structure enables Belmond to oppose any proposal that Belmond believes is contrary to the best interests of the Company and its shareholders, including a coercive or unfair offer to acquire the Company, and thus preserve the value of Belmond for all shareholders. The structure has been in place since the Company’s initial public offering in 2000, and has been fully described in the Company’s public filings and clearly disclosed to investors considering buying the class A common shares.

However, new litigation against the Company involving its corporate governance structure or other future challenges may occur, the outcome of which may be uncertain. Furthermore, new litigation or future challenges may cause the Company to incur costs, such as legal expenses, to defend its corporate governance structure and these costs may be substantial in amount.

Provisions in the Company’s charter documents, and the preferred share purchase rights currently attached to the class A and class B common shares, may discourage a potential acquisition of Belmond, even one that the holders of a majority of the class A common shares might favor.

The Company’s memorandum of association and bye-laws contain provisions that could make it more difficult for a third party to acquire Belmond or to engage in another form of transaction involving a change of control of the Company without the consent of the Company’s board of directors. These provisions include:

• a supermajority shareholder voting provision for the removal of directors from office with or without cause,

• a supermajority shareholder voting provision for “business combination” transactions with beneficial owners of shares carrying 15% or more of the votes which may be cast at any general meeting of shareholders, and

• limitations on the voting rights of such 15% beneficial owners.

Also, the Company’s board of directors has the right under Bermuda law to issue preferred shares without shareholder approval, which could be done to dilute the share ownership of a potential hostile acquirer. Although management believes these provisions

27

provide the shareholders an opportunity to receive a higher price by requiring potential acquirers to negotiate with the Company’s board of directors, these provisions apply even if the offer is favored by shareholders holding a majority of the Company’s equity.

The Company has in place a shareholder rights agreement providing for rights to purchase series A junior participating preferred shares of the Company. The rights are not currently exercisable, and they are attached to and transferable with the class A and B common shares on a one-to-one basis. These rights may have anti-takeover effects on a potential acquirer holding 15% or more of the outstanding class A or B common shares.

These anti-takeover provisions are in addition to the ability of Holdings and directors and officers of the Company to vote shares representing a significant majority of the total voting power of the Company’s common shares. See the risk factor immediately above and Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters—Voting Control of the Company; Changes in Control.

A judgment of a United States court for liabilities under the U.S. securities laws might not be enforceable in Bermuda, or an original action might not be brought in Bermuda against the Company for liabilities under U.S. securities laws.

The Company is incorporated in Bermuda, a majority of its directors or executive officers are not U.S. citizens or residents, and most of its assets and the assets of its directors and officers are located outside the United States. As a result, it may be difficult for shareholders to:

• effect service of process within the United States upon the Company or its directors and officers, or

• enforce judgments obtained in United States courts against the Company or its directors and officers based upon the civil liability provisions of the United States federal securities laws.

Belmond has been advised by its Bermuda legal counsel that there is doubt as to:

• whether a judgment of a United States court based solely upon the civil liability provisions of the United States federal securities laws would be enforceable in Bermuda against the Company or its directors and officers, and

• whether an original action could be brought in Bermuda against the Company or its directors and officers to enforce liabilities based solely upon the United States federal securities laws.

ITEM 1B.       Unresolved Staff Comments

None.

ITEM 2.       Properties

As described in Item 1—Business, Belmond owns, partially-owns and/or operates 45 properties, consisting of 34 highly individual deluxe hotels, 29 of which are owned (including nine under long-term lease), five European tourist trains, two cruise ships in Myanmar (one of which is under long-term charter), one French canal cruise business consisting of five small canal boats, and one stand-alone restaurant in the United States. Belmond also owns interests of 50% or less in four hotels in Peru (including three under long-term lease), its Southeast Asian train and PeruRail. It also operates under management contract but has no ownership interest in one hotel in the United States. The corporate office and regional sales, marketing and operating offices of the hotels, trains and cruise businesses are occupied under operating leases. The Company has two properties scheduled for future openings, the Belmond Cadogan Hotel in London, England and the Belmond Andean Explorer train in Peru.

ITEM 3.       Legal Proceedings

Except as described below, there are no material legal proceedings, other than ordinary routine litigation incidental to Belmond’s business, to which the Company or any of its subsidiaries is a party or to which any of their property is subject.

Belmond Copacabana Palace

As previously reported, in February 2013, the State of Rio de Janeiro Court of Justice affirmed a 2011 decision of a Rio state trial court against Sea Containers Ltd (“SCL”) in lawsuits brought against SCL by minority shareholders in Companhia Hoteis Palace (“CHP”), the company that owns the Copacabana Palace, relating to the recapitalization of CHP in 1995, but reduced the total award against SCL to approximately $27,000,000. SCL further appealed the judgments during the second quarter of 2013 to the

28

Superior Court of Justice in Brasilia. SCL sold its shares in CHP to the Company in 2000. Years later, in 2006, SCL entered insolvency proceedings in the U.S. and Bermuda that are continuing in Bermuda. Possible claims could be asserted against the Company or CHP in connection with this Brazilian litigation, although no claims have been asserted to date. 

As a precautionary measure to defend the hotel, CHP commenced a declaratory lawsuit in the Rio state court in December 2013 seeking judicial declarations that no fraud was committed against the SCL plaintiffs when the shares in CHP were sold to the Company in 2000 and that the sale of the shares did not render SCL insolvent. Pending rulings on those declarations, the court granted CHP an injunction preventing the SCL plaintiffs from provisionally enforcing their 2011 judgments against CHP, which judgment was subsequently reversed on appeal in May 2014. In September 2014, CHP sought reconsideration from the appellate court of this decision, but the court dismissed its request, resulting in the return of the declaratory lawsuit proceedings to the Rio State Court.

Management cannot estimate the range of possible loss if the SCL plaintiffs assert claims against the Company or CHP, and Belmond has made no reserves in respect of this matter. If any such claims were brought, Belmond would continue to defend its interests vigorously. See Note 19 to the Financial Statements (Item 8).

Ubud Hanging Gardens

In November 2013, the third-party owner of Ubud Hanging Gardens in Bali, Indonesia dispossessed Belmond from the hotel under long-term lease without prior notice. As a result, Belmond was unable to continue operating the hotel and, accordingly, to prevent any confusion to its guests, Belmond ceased referring to the property in its sales and marketing materials, including all electronic marketing.

Belmond believed that the owner's actions were unlawful and in breach of the lease arrangement and constituted a wrongful dispossession. Belmond pursued its legal remedies through arbitration proceedings required under the lease. In June 2015, a Singapore arbitration panel issued its final award in favor of Belmond, holding that the owner had breached Indonesian law and the lease, and granting monetary damages and costs to the Company in an amount equal to approximately $8,500,000. Since its receipt of the arbitral award, Belmond has been engaged in the process of enforcing this arbitral award in the Indonesian courts. Starting in April 2014, the Indonesian trial courts have dismissed six separate actions filed by the owner for lack of jurisdiction due to the arbitration clause in the parties’ lease. The owner has appealed these decisions, one of which was reversed by the Appellate Court in October 2014. Belmond appealed this case to the Indonesian Supreme Court, which in December 2016 affirmed the Appellate Court's decision. Belmond is considering its position but is likely to seek review for reconsideration by the Supreme Court. As supplemental proceedings to its arbitration claim, Belmond commenced contempt proceedings in the High Court in London, England, where the owner resided, for pursuing the Indonesian proceedings contrary to an earlier High Court injunction, and obtained against the owner in July 2014 a contempt order, which subsequently resulted in the court issuing a committal order of imprisonment for 120 days. The owner left England before the court order was issued and has not yet served the sentence.

Belmond does not believe there is any merit in the owner’s outstanding Indonesian actions and is vigorously defending its rights while it seeks to enforce the Singapore arbitral award. While the Company can give no assurances, it believes that it should ultimately be able to enforce its arbitral award. Given the uncertainty involved in this litigation, Belmond recorded in the year ended December 31, 2013, a non-cash impairment charge in the amount of $7,031,000 relating to long-lived assets and goodwill of Ubud Hanging Gardens and has not booked a receivable in respect of the award. See Notes 4 and 19 to the Financial Statements.

Belmond Hotel das Cataratas

In September 2014, the Brazilian Ministry of Planning, Budget and Management notified the Company that it was denying the Company's application to extend the term or reduce the rent under the lease for Belmond Hotel das Cataratas, which was entered into in 2007. Belmond had applied for the amendment in 2009 based on its claim that it suffered additional unanticipated and/or unforeseeable costs in performing the refurbishment of the hotel as required by the lease and related tender documentation in order to raise the standard of the property to a five star luxury standard.

Prior to August 2014, with the agreement of the Ministry, the Company had been paying the base annual rent without an annual adjustment for inflation as provided for in the lease, pending resolution of Belmond’s application. Throughout this period, the Company had expensed the full rental amount and has fully accrued the difference between the rental charge and the amount actually paid. Based on the Ministry’s decision denying any relief, the Ministry directed the Company that it would henceforth assess rent at the contractual rate, which has been included in the table of future rental payments as at December 31, 2016, and that it must pay the difference between the contractual rent and the rent that had been actually paid. On March 20, 2015, the Ministry provided notice to the hotel that an aggregate amount of approximately R$17,000,000 ($5,215,000) was due on March 31, 2015 as a result of its rejection of any relief sought by Belmond.

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The Company appealed to the Ministry to reconsider its decision on both procedural and substantive grounds. Pending this requested reconsideration and exhaustion of administrative remedies, the Company did not pay to the Ministry the amount claimed. The Company filed a lawsuit in the Federal Court in Paraná State in August 2016 against the Government of Brazil regarding the Ministry’s failure to properly consider and modify the lease concession for Belmond Hotel das Cataratas. The Federal Court granted the Company’s request for an injunction against the Government enforcing its claim and granted the Company’s request for a 25% preliminary reduction in rent, pending a decision on the merits, which the Superior Court upheld on appeal in a decision rendered in September 2016. The Government appealed to a three judge panel of the Superior Court, which upheld the decision of the Federal Court in favor of the Company in a judgment rendered in January 2017. A discovery calendar has been agreed for the litigation on the merits in the Federal Court where the Company intends to continue to pursue its claims vigorously.

In the meantime, the Company is paying rent at the reduced amount but continues to accrue rent at the full contractual amount. Amounts accrued at December 31, 2016 totaled R$21,461,000 ($6,583,000). The Company does not believe that any loss above the amounts accrued is likely.

Belmond Sanctuary Lodge

In January 2015, Peru Belmond Hotels S.A. received notification of a claim filed by the Public Prosecutor's office of the Regional Government of Cusco, seeking annulment of a contract and public deed of amendment extending the term of the Belmond Sanctuary Lodge concession for ten years from May 2015 to May 2025. The claim alleged that the amendment was invalid principally because the President of the Region, who executed the public deed on December 27, 2013, did not have proper authority to execute the amendment because a resolution dismissing him from office had been issued the day before. The court of first instance dismissed the case in May 2015 on technical grounds and the claimant appealed to the Superior Court of Cusco. At a hearing before the Superior Court of Cusco in September 2015, the Superior Court overturned the decision of the court of first instance and vacated the entire proceeding. The court of first instance reconsidered the matter and again dismissed the Public Prosecutor's claim in January 2016. The Public Prosecutor's office appealed this decision as well and at a hearing on June 16, 2016, the Superior Court of Cusco reaffirmed the decision of the court of first instance. The Public Prosecutor has declined to appeal the matter to the Supreme Court of Peru.

Belmond Miraflores Park Hotel

The Company is contesting a claim by the municipality of Miraflores in Lima, Peru, the location of its Belmond Miraflores Park Hotel (“BMP”), that BMP has violated a municipal nuisance ordinance by generating noise and vibration that disturbed certain owners of apartments in an adjoining residential building. The local administrative court ruled in favor of the municipality, levying a nominal fine and injunctive relief that included the potential closure of BMP until the noise and vibration has been eliminated. In March 2016, after the administrative court's ruling was affirmed at the trial and subsequently, the appellate court level, BMP appealed to the Supreme Court of Peru. Enforcement of the ruling has been stayed pending the appeal. BMP does not expect to receive a ruling and formal notification from the Supreme Court until at least March 2017. Management believes that the risk of closure of BMP is remote because BMP expects to complete a remediation plan by March 2017 and may also seek to acquire the apartments of the owners who sought the relief. Accordingly, management does not believe that a material loss is probable and no accrual has been made in respect of this matter.

Cupecoy Village Development N.V. ("Cupecoy")

In July 2015, Cupecoy Village Development N.V. (“Cupecoy”) received notification from the tax authorities in Sint Maarten of an intention to issue tax assessments for periods 2007-2010 in respect of wages taxes, social security, turnover tax and penalties, which Belmond believes indicated a maximum possible loss of $16,500,000. Belmond believes that the report received from the tax authorities contained a number of material miscalculations and misinterpretations of fact and law. The Company had provided a written response to the tax authorities disputing their assessment and expected the resolution of this dispute to result in only an immaterial cost. However, the tax authorities consistently failed to respond or otherwise engage with Belmond or Cupecoy and therefore the Company gave the tax authorities notice that it intended to wind up Cupecoy, which the Company did after receiving no response from the authorities to this notice. In October 2016, following our application to the court, Cupecoy was declared technically insolvent in light of the 2015 tax claim, at which point the Company determined that any liability in respect of Cupecoy was effectively discharged. Cupecoy is currently scheduled for a final bankruptcy declaration in the first quarter of 2017.

"Cipriani" Trademark

In May 2010, after prevailing in litigation at the trial and appellate court levels, Belmond settled litigation in the United Kingdom for infringement of its U.K. and Community (European wide) registrations for the “Cipriani” trademark. Defendants paid the

30

amount of $3,947,000 to Belmond in March 2010 with the balance of $9,833,000 being payable in installments over five years with interest. Belmond received the final payment in the amount of $1,178,000 in June 2015.

Subsequent to Belmond’s success before the U.K. courts, there have arisen a number of European trade mark opposition and infringement cases relating to Belmond "Cipriani" and "Hotel Cipriani" Community trademarks. These include an ongoing invalidity action filed by Arrigo Cipriani in the European Trade Mark Office against Belmond’s "Cipriani" Community trademark. To date, Belmond has successfully rebutted this challenge at every level of administrative appeal, and this case is now before the General Court where Belmond also expects to prevail. Belmond has recently been successful in securing the cancellation in Portugal of a trademark application filed by an affiliated entity of the Cipriani family for “Cipriani”. Belmond has also been successful in obtaining cancellations of "Cipriani" trademark applications made by the Cipriani family's corporate entity in Russia.

In addition, there are a number of ongoing trade mark disputes with the Cipriani family in Italy: in January 2015, the Cipriani family and affiliated entities commenced proceedings against Belmond in the Court of Venice, asserting that a 1967 agreement pursuant to which the family sold their interest in the Hotel Cipriani constituted a coexistence agreement allowing both the Company to use “Hotel Cipriani” and the Cipriani family to use “Cipriani” and in August 2015, pursuant to a separate claim filed by the Cipriani family, the Court of Venice ruled in favor of the Cipriani family, determining that their use of their full name (rather than just an initial with their surname), would not constitute infringement of the Company’s registered trademark. The Court’s ruling purports to apply to hotels and restaurants on an EU-wide basis (other than the U.K.) rather than only Italy. The Company has appealed this decision. Separate proceedings brought by Belmond in Spain to defend Belmond's trademarks against a use by the Cipriani family and its affiliated entities of "Cipriani" to promote a restaurant, have been stayed pending the outcome of the Venice appeal.

While Belmond believes that it has meritorious cases in all of these proceedings, Belmond cannot estimate the range of possible additional loss to Belmond if it should not prevail in any or all of these cases and Belmond has made no accruals in these matters.

The Company and certain of its subsidiaries are parties to various legal proceedings arising in the normal course of business. These proceedings generally include matters relating to labor disputes, tax claims, personal injury cases, lease negotiations and ownership disputes. The outcome of each of these matters cannot be determined with certainty, and the liability that the relevant parties may ultimately incur with respect to any one of these matters in the event of a negative outcome may be in excess of amounts currently accrued for with respect to these matters. Where a reasonable estimate can be made, the additional losses or range of loss that may be incurred in excess of the amount recognized from the various legal proceedings arising in the normal course of business are disclosed separately for each claim, including a reference to where it is disclosed. However, for certain of the legal proceedings, management is unable to estimate the loss or range of loss that may result from these claims due to the highly complex nature or early stage of the legal proceedings.

ITEM 4.       Mine Safety Disclosures

None.

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PART II

ITEM 5.       Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The class A common shares of the Company are traded on the New York Stock Exchange under the symbol Belmond.  All of the class B common shares of the Company are owned by a subsidiary of the Company and are not listed. See Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table presents the quarterly high and low sales prices of a class A common share in 2016 and 2015 as reported for New York Stock Exchange composite transactions:

	2016				2015
	High		Low		High		Low
First quarter	$	10.04	$	7.31	$	12.55	$	10.51
Second quarter	10.00		8.69		13.26		12.01
Third quarter	12.86		9.60		12.66		9.85
Fourth quarter	14.05		11.50		10.94		8.51

The Company paid no cash dividends in 2016 and 2015 and has no present intention to pay dividends in the future.

The Islands of Bermuda where the Company is incorporated have no applicable government fiscal or monetary laws, decrees or regulations which restrict the export or import of capital or affect the payment of dividends or other distributions specifically to nonresident holders of the class A and B common shares of the Company or which subject United States holders to taxes. The Company's ability to pay dividends is limited by its credit agreement.

At February 20, 2017, there were 77 record holders of the class A common shares of the Company.

During 2016, the Company made no offering of securities including its class A common shares that was not registered in the United States.

Information responding to Item 201(e) of SEC Regulation S-K is omitted because the Company is a “foreign private issuer” as defined in SEC Rule 3b-4 under the 1934 Act.

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ITEM 6.       Selected Financial Data

Belmond Ltd. and Subsidiaries

	2016		2015		2014		2013		2012
	$’000		$’000		$’000		$’000		$’000
Revenue	549,824		551,385		585,715		594,081		538,952
Impairments(1)	(1,007	)	(9,796	)	(1,211	)	(36,430	)	(5,892	)
Gain on disposal of property, plant and equipment, equity method investments and other assets(2)	938		20,275		4,128		—		1,514
Earnings from unconsolidated companies, net of tax	11,013		9,075		9,484		6,442		2,124
Earnings/(losses) from continuing operations	35,401		17,388		2,047		(26,178	)	(11,426	)
Net earnings/(losses) from discontinued operations, net of tax(3)	1,032		(1,534	)	(3,782	)	(5,318	)	4,538
Net earnings/(losses)	36,433		15,854		(1,735	)	(31,496	)	(6,888	)
Net (earnings)/losses attributable to non-controlling interests	(109	)	411		(145	)	(63	)	(173	)
Net earnings/(losses) attributable to Belmond Ltd.	36,324		16,265		(1,880	)	(31,559	)	(7,061	)

	2016	2015		2014		2013		2012
	$	$		$		$		$
Basic earnings per share:
Earnings/(losses) from continuing operations	0.35	0.17		0.02		(0.25	)	(0.11	)
Net earnings/(losses) from discontinued operations, net of tax	0.01	(0.01	)	(0.04	)	(0.05	)	0.04
Basic net earnings/(losses) per share attributable to Belmond Ltd.	0.36	0.16		(0.02	)	(0.31	)	(0.07	)
Diluted earnings per share:
Earnings/(losses) from continuing operations	0.34	0.17		0.02		(0.25	)	(0.11	)
Net earnings/(losses) from discontinued operations, net of tax	0.01	(0.01	)	(0.04	)	(0.05	)	0.04
Diluted net earnings/(losses) per share attributable to Belmond Ltd.	0.35	0.16		(0.02	)	(0.31	)	(0.07	)
Dividends per share	—	—		—		—		—

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	2016	2015	2014	2013	2012
	$’000	$’000	$’000	$’000	$’000
Total assets	1,524,068	1,509,475	1,655,223	1,879,866	1,892,027
Total long-term debt and obligations under capital leases(4)	602,102	596,487	620,235	639,731	619,505
Total shareholders’ equity	686,450	658,064	761,186	908,222	935,956

The above selected financial data should be read in conjunction with the information set forth under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and related notes (Item 8).

(1) The impairment in 2016 consisted of impairment of property, plant and equipment of $1,007,000 at Belmond Orcaella.

The impairment in 2015 consisted of impairment of goodwill of $4,098,000 at Belmond Grand Hotel Europe, $3,581,000 at Belmond Jimbaran Puri, $1,455,000 at Belmond La Résidence Phou Vao and $662,000 at Belmond Northern Belle.

The impairment in 2014 consisted of impairment of property, plant and equipment of $1,211,000 relating to the write-down to fair value of train carriages of Belmond's former Great South Pacific Express train, which were held in Australia and were not in service.

The impairments in 2013 consisted of impairment of property, plant and equipment at Belmond La Samanna of $35,680,000 and impairment of property, plant and equipment at Belmond Grand Hotel Europe of $750,000.

The impairments in 2012 consisted of impairment of property, plant and equipment of $2,538,000 and impairment of other assets of $1,299,000 related to the write-down to fair value of train carriages of Belmond's former Great South Pacific Express train which were held in Australia and were not in service, and impairment of goodwill at Belmond Reid's Palace of $2,055,000.

(2) The 2016 gain was related to the gain on sale of the spa building at Belmond Casa de Sierra Nevada and the recognition of the deferred gain in relation to the sale of Inn at Perry Cabin by Belmond in March 2014.

The 2015 gain was related to the sale of Belmond's 50% ownership in Hotel Ritz by Belmond in May 2015 and the recognition of the deferred gain in relation to the sale of Inn at Perry Cabin by Belmond in March 2014.

The 2014 gain was related to the sale of the property and operations of Inn at Perry Cabin by Belmond in March 2014. Due to Belmond's continuing involvement in managing the hotel, its results are presented within continuing operations.

The 2012 gain was related to a capital lease at Belmond Grand Hotel Europe that was extinguished as part of a refinancing of its debt facilities.

(3) The results of Ubud Hanging Gardens, Porto Cupecoy, The Westcliff, The Observatory Hotel, Bora Bora Lagoon Resort and Keswick Hall have been presented as discontinued operations for all periods presented.

Included in the earnings/(losses) from discontinued operations are real estate, goodwill, other intangible assets and property, plant and equipment impairment losses of $7,031,000 in 2013 and $3,166,000 in 2012; gain on sale of Porto Cupecoy of $439,000 in 2013 and gain on sales of Keswick Hall, Bora Bora Lagoon Resort, The Observatory Hotel and The Westcliff in 2012 of $15,384,000.

(4) Total long-term debt and obligations under capital lease excludes discount on secured term loan and debt issuance costs.

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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

Belmond currently owns, partially-owns and/or operates 45 properties (with two additional properties scheduled for future openings, the Belmond Cadogan Hotel in London, England and the Belmond Andean Explorer train in Peru).

Belmond has six reportable segments: owned hotels in (1) Europe, (2) North America (including one stand-alone restaurant) and (3) Rest of world, (4) Owned trains and cruises, (5) Part-owned/ managed hotels and (6) Part-owned/ managed trains.

Belmond revised the order of the presentation of these segments in the twelve months ended December 31, 2016 and included a new sub-total to show management fees earned by the Company from its part-owned/managed operations. In addition, Belmond reclassified certain expenses associated with the Company’s development team from the Part-owned/managed hotels segment to central costs. Prior periods have been re-presented to reflect the current period presentation. There has not been a material impact on the consolidated financial statements.

Hotels represent the largest part of Belmond’s business with the vast majority of the Company's revenues in 2016 , 2015 and 2014, respectively, derived primarily from the Europe, North America and Rest of world segments.

Hotels in 2016 consisted of 29 deluxe hotels which were wholly or majority owned by Belmond or, in the case of Belmond Charleston Place, owned by a consolidated variable interest entity. Eleven of the owned hotels are located in Europe, five in North America and thirteen in the rest of the world. In addition, Belmond owns and operates the stand-alone restaurant ‘21’ Club in New York which is included within the North America owned hotels segment.

Belmond's part-owned/ managed segment consists of five hotels which Belmond operates under management contracts in Peru and the United States. Belmond has unconsolidated equity interests in four of the managed hotels.

In recent years, Belmond has sold to third parties a number of properties not considered key to Belmond’s portfolio of unique, high-valued properties as part of management's long-term strategy to reduce leverage and redeploy the capital in properties with higher potential returns.

In May 2015, Belmond completed the sale of Hotel Ritz by Belmond, Madrid, Spain. The gain on sale was reported within gain on disposal of property, plant and equipment and equity method investments in the statements of consolidated operations in the relevant periods.

In March 2014, Belmond completed the sale of Inn at Perry Cabin by Belmond, St. Michaels, Maryland. Belmond has continued to manage the hotel for the new owner. Due to Belmond's continuing involvement in managing the hotel, its results, including the gain on sale, are presented within continuing operations.

Belmond's owned trains and cruises segment consists of five European tourist trains, two river cruise ships in Myanmar and one French canal cruise business. On August 30, 2016, the Company commenced the operations of Belmond Grand Hibernian, the first luxury overnight train to travel throughout the island of Ireland.

Belmond's part-owned/ managed trains segment consists of two train businesses in Southeast Asia and Peru which Belmond operates under management contracts. Belmond has unconsolidated equity interests in both trains.

Hotel RevPAR, ADR and occupancy

Revenue per available room (“RevPAR”) is calculated by dividing room revenue by room nights available for the period. Same store RevPAR is a comparison of RevPAR based on the operations of the same units in each period, by excluding the effect of any hotel acquisitions in the period or major refurbishment where a property is closed for a full quarter or longer. The comparison also excludes the effect of dispositions (including discontinued operations) or closures. Management uses RevPAR and same store RevPAR to identify trend information with respect to room revenue and to evaluate the performance of a specific hotel or group of hotels in a given period.  

Average daily rate ("ADR") is calculated by dividing room revenue by total rooms sold for the period. Management uses ADR to measure the level of pricing achieved by a specific hotel or group of hotels in a given period.

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Occupancy is calculated by dividing total rooms sold by total rooms available for the period. Occupancy measures the utilization of a hotel’s available capacity. Management uses occupancy to measure demand at a specific hotel or group of hotels in a given period.

ADR and RevPAR are measures for a point in time (a day, month or year) and are most often compared across like time periods. Current ADR and RevPAR are not necessarily indicators of future performance.

In 2016, same store RevPAR decreased by 1% in U.S. dollars, but increased by 3% in constant currency. Average occupancy was 61% and ADR was $490. In 2015, same store RevPAR decreased by 5% in U.S. dollars, but increased by 11% when measured in constant currency. Average occupancy was 61% and ADR was $481.

Business strategy

Belmond plans to grow the business in the long term by:

• driving top- and bottom-line growth at the Company's existing businesses

• stepping up the Company's efforts to continue to build brand awareness, and

• positioning the Company for footprint expansion.

For additional information, see "Management Strategies" in Item 1—Business.

Revenue and expenses

Belmond derives revenue from owned hotel operations primarily from the sale of rooms and the provision of food and beverages.  The main factors for analyzing rooms revenue are the number of room nights sold, or occupancy, ADR, and RevPAR, referred to above which is a measure of both these factors.

The revenue from the owned trains and cruises segment primarily comprises tickets sold for travel and food and beverage sales.

Revenue from part-owned/ managed hotels and trains includes fees received under management contracts, which are typically based upon a combination of a percentage of the revenue from operations and operating earnings calculated before specified fixed charges.

Cost of services includes labor, repairs and maintenance, energy and the costs of food and beverages sold to customers in respect of owned hotels, trains and cruises.

Selling, general and administrative expenses include travel agents’ commissions, the salaries and related costs of the sales teams, advertising and public relations costs, and the salaries and related costs of management.

Depreciation and amortization includes depreciation of owned hotels, trains and cruises.

Impact of foreign currency exchange rate movements

As reported below in the comparisons of the 2016, 2015 and 2014 financial years under “Results of Operations”, Belmond has exposure arising from the impact of translating its global foreign currency earnings and expenses into U.S. dollars. Ten of Belmond’s owned hotels in 2016 operated in euro territories, two in Brazilian real, one in South African rand, one in British pounds sterling, three in Botswana pula, two in Mexican peso, one in Peruvian nuevo sol, one in Russian ruble and six in various Southeast Asian currencies. Revenue of the Venice Simplon-Orient-Express, Belmond British Pullman, Belmond Northern Belle and Belmond Royal Scotsman trains was primarily in British pounds sterling, but the operating costs of the Venice Simplon-Orient-Express were mainly denominated in euros. Revenue derived by Belmond Maroma Resort and Spa, Belmond La Samanna and Belmond Miraflores Park was recorded in U.S. dollars, but the majority of the hotels’ expenses were denominated in Mexican pesos, euros and Peruvian nuevo soles, respectively. Both revenue and the majority of expenses for Belmond Governor's Residence and Belmond La Résidence D'Angkor were recorded in U.S. dollars.

Except for the specific instances described above, Belmond’s properties match foreign currency earnings and costs as far as possible to provide a natural hedge against currency movements. The reporting of Belmond’s revenue and costs translated into U.S. dollars, however, can be materially affected by foreign exchange rate fluctuations from period to period.

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Constant currency

Belmond analyzes certain key financial measures on a constant currency basis as this helps identify underlying business trends, without distortion from the effects of currency movements. Measurement on a constant currency basis means the results exclude the effect of foreign currency translation and are calculated by translating prior year results at current year exchange rates.

Market capitalization

The Company’s class A common share price increased during 2016 to $13.35 at December 31, 2016, from $9.50 at December 31, 2015 and Belmond’s market capitalization increased to $1.36 billion at December 31, 2016, from $0.96 billion at December 31, 2015.

Results of Operations

Belmond’s operating results for the years 2016, 2015 and 2014, expressed as a percentage of revenue, are as follows:

	2016		2015		2014
Year ended December 31,	%		%		%
Revenue:
Owned hotels:
Europe	36		36		36
North America	27		27		24
Rest of world	23		23		25
Total owned hotels	86		86		85
Owned trains & cruises	11		12		13
Part-owned/managed hotels	1		1		1
Part-owned/managed trains	2		1		1
Total part-owned/managed	3		2		2
Revenue	100		100		100
Cost of services	(44	)	(44	)	(45	)
Selling, general and administrative	(36	)	(37	)	(37	)
Depreciation and amortization	(10	)	(9	)	(9	)
Impairment of goodwill	—		(2	)	—
Impairment of property, plant and equipment	—		—		—
Gain on disposal of property, plant and equipment and equity method investments	—		4		1
Gain/(loss) on extinguishment of debt	—		—		(2	)
Interest income, interest expense and foreign currency, net	(3	)	(7	)	(6	)
Earnings before income taxes and earnings from unconsolidated companies, net of tax	7		5		2
Provision for income taxes	(3	)	(3	)	(3	)
Earnings from unconsolidated companies, net of tax	2		2		2
Earnings from continuing operations	6		4		1
Net (losses)/earnings from discontinued operations, net of tax	—		—		(1	)
Net earnings/(losses)	6		4		—

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Operating information for Belmond’s owned hotels for the years ended December 31, 2016, 2015 and 2014 is as follows:

Year ended December 31,	2016	2015	2014
Rooms Available
Europe	271,963	273,052	272,097
North America	256,726	255,216	262,562
Rest of world	376,952	371,207	374,855
Worldwide	905,641	899,475	909,514
Rooms Sold
Europe	175,060	169,371	152,369
North America	171,392	171,828	171,967
Rest of world	204,944	211,059	208,106
Worldwide	551,396	552,258	532,442
Occupancy (percentage)
Europe	64	62	56
North America	67	67	65
Rest of world	54	57	56
Worldwide	61	61	59
Average daily rate (in U.S. dollars)
Europe	676	689	783
North America	421	429	425
Rest of world	388	356	413
Worldwide	490	481	523
RevPAR (in U.S. dollars)
Europe	435	427	439
North America	281	289	278
Rest of world	211	202	229
Worldwide	298	295	306

2016 compared to 2015

			Change %
Year ended December 31,	2016	2015	Dollars		Constant currency
Same Store RevPAR (in U.S. dollars)
Europe	435	427	2	%	4	%
North America	281	289	(3	)%	(2	)%
Rest of world	216	207	4	%	9	%
Worldwide	303	299	1	%	3	%

The same store RevPAR data for 2016 and 2015 excludes the operations of Belmond Eagle Island Lodge, which was closed for refurbishment from January through November 2015, and Belmond La Residence d'Angkor, which closed for refurbishment in May 2016 and re-opened in November 2016. Both of these operations are included in the Rest of world segment.

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2015 compared to 2014

			Change %
Year ended December 31,	2015	2014	Dollars		Constant currency
Same Store RevPAR (in U.S. dollars)
Europe	427	439	(3	)%	19	%
North America	289	283	2	%	3	%
Rest of world	200	233	(14	)%	9	%
Worldwide	297	312	(5	)%	11	%

The same store RevPAR data for 2015 and 2014 exclude the operations of Inn at Perry Cabin by Belmond (included in the North America segment), Belmond Miraflores Park and Belmond Eagle Island Lodge, one of the safari camps in Belmond Safaris (both included in the Rest of world segment) as these properties did not operate during one of the periods presented.

Year ended December 31, 2016 compared to year ended December 31, 2015 and year ended December 31, 2015 compared to year ended December 31, 2014

Overview

2016 compared to 2015

Net earnings attributable to Belmond Ltd. for the year ended December 31, 2016 was $36.3 million ($0.36 per common share) on revenue of $549.8 million, compared with a net earnings of $16.3 million ($0.16 per common share) on revenue of $551.4 million in the prior year. The increase in net earnings was partially due to an increase in earnings of $6.6 million from the Company's PeruRail joint venture which commenced transport of copper concentrate from the Las Bambas mine. This was complemented by an increase in earnings at Belmond Copacabana Palace as a result of the 2016 Olympic Games that took place in Rio de Janeiro and the reopening of the Belmond Eagle Island Lodge as well as strong year-over-year growth for the remaining hotels in Europe. These increases were partially offset by the gain on sale of Hotel Ritz by Belmond in Madrid of $19.7 million which was recorded in the year ended December 31, 2015 which did not reoccur. In addition, the Company benefited from a decrease in central costs due to lower legal and professional fees and payroll savings related to a weaker British pound than in the prior-year. In the year ended December 31, 2015, the Company recorded a goodwill impairment charge of $9.8 million ($1.0 million impairment charge of property, plant and equipment related in the year ended December 31, 2016). In addition, the company benefited from a foreign exchange gain of $9.2 million that was recognized in the year ended December 31, 2016, compared to a foreign exchange loss of $5.0 million in the year ended December 31, 2015.

2015 compared to 2014

The net earnings attributable to Belmond Ltd. for the year ended December 31, 2015 was $16.3 million ($0.16 per common share) on revenue of $551.4 million, compared with net loss of $1.9 million ($0.02 per common share) on revenue of $585.7 million in the prior year. The net earnings in the year ended December 31, 2015 were primarily due to the $20.3 million gain on disposal of property, plant and equipment and equity method investments, largely as a result of the May 2015 sale of Hotel Ritz by Belmond, compared with a $4.1 million gain recognized in the year ended December 31, 2014. In the year ended December 31, 2014 , the Company recorded a loss on extinguishment of debt of $14.5 million, which did not reoccur in the year ended December 31, 2015. Additionally, there was a $9.8 million impairment charge and foreign exchange loss of $5.0 million recognized in the year ended December 31, 2015 compared with a $1.2 million impairment charge and a foreign exchange gain of $2.3 million recognized in the year ended December 31, 2014.

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Revenue

	2016	2015	2014
Year ended December 31,	$ millions	$ millions	$ millions
Revenue:
Owned hotels:
Europe	199.1	200.0	212.7
North America	145.9	148.1	142.6
Rest of world	130.3	124.4	142.7
Total owned hotels	475.3	472.5	498.0
Owned trains & cruises	59.3	65.5	74.3
Part-owned/managed hotels	4.4	5.2	6.0
Part-owned/managed trains	10.8	8.2	7.4
Total part-owned/managed	15.2	13.4	13.4
Revenue	549.8	551.4	585.7

2016 compared to 2015

Revenue was $549.8 million for the year ended December 31, 2016, a decrease of $1.6 million, from $551.4 million for the year ended December 31, 2015. Total owned hotels revenue was $475.3 million for the year ended December 31, 2016, an increase of $2.8 million, or 1%, from $472.5 million for the year ended December 31, 2015. The increase in total owned hotels revenue was largely due to a revenue increase of $5.0 million at Belmond Copacabana Palace due to the 2016 Olympic Games that took place in Rio de Janeiro and a revenue increase of $3.1 million in Belmond Safaris, Botswana, following the reopening of Belmond Eagle Island Lodge which was closed from January to November 2015 for a complete renovation. This was offset by a revenue decrease of $4.9 million at Belmond Hotel Cipriani, Venice, Italy due to a challenging comparable period, with revenue in 2015 benefiting from the Biennale art festival, which occurs every other year, as did the World Expo 2015 in Milan, both of which generated increased visitation to Venice. Revenue from total owned trains and cruises was $59.3 million for the year ended December 31, 2016, a decrease of $6.2 million, or 9%, from $65.5 million for the year ended December 31, 2015. This was a result of a combined revenue decline of $1.2 million at the Company's two river cruises in Myanmar and a fall in revenue of $4.3 million at the Company's European trains due to the year-over-year depreciation of the British pound against the U.S. dollar. This was slightly offset by revenue growth of $1.7 million at Belmond Grand Hibernian, which commenced operations on August 30, 2016.

2015 compared to 2014

Revenue was $551.4 million for the year ended December 31, 2015, a decrease of $34.3 million, or 6%, from $585.7 million for the year ended December 31, 2014. Total owned hotels revenue was $472.5 million for the year ended December 31, 2015, a decrease of $25.5 million, or 5%, from $498.0 million for the year ended December 31, 2014. The decrease in total hotels revenue was principally attributable to a $37.6 million and $25.7 million fall in revenue at the Company's European and Brazilian hotels due to unfavorable exchange rate movements, partially offset by growth on a constant currency basis of $24.9 million and $8.0 million, respectively. Revenue from owned trains and cruises was $65.5 million in the year ended December 31, 2015, a decrease of $8.8 million, or 12%, from $74.3 million in the year ended December 31, 2014 primarily as a result of revenue declines at the Company's two river cruise ships in Myanmar and Belmond Northern Belle.

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Owned hotels - Europe

Year ended December 31,	2016	2015	2014
Rooms Available	271,963	273,052	272,097
Rooms Sold	175,060	169,371	152,369
Occupancy (percentage)	64	62	56
Average daily rate (in U.S. dollars)	676	689	783
RevPAR (in U.S. dollars)	435	427	439

			Change %
Year ended December 31,	2016	2015	Dollars		Constant currency
Same Store RevPAR (in U.S. dollars)	435	427	2	%	4	%

			Change %
Year ended December 31,	2015	2014	Dollars		Constant currency
Same Store RevPAR (in U.S. dollars)	427	439	(3	)%	19	%

2016 compared to 2015

Revenue was $199.1 million for the year ended December 31, 2016, a decrease of $0.9 million from $200.0 million for the year ended December 31, 2015. This was primarily due to a revenue decrease of $4.9 million or 13% at Belmond Hotel Cipriani partially due to a challenging comparative period, with revenue for 2015 benefiting from the Biennale art festival, which occurs every other year, as did the World Expo 2015 in Milan, both of which generated increased visitation to Venice. Partially offsetting this decline, Belmond Reid's Palace increased revenue by $2.5 million due to a 18% increase in occupancy, which largely resulted from the Company's strategic decision to focus on driving wholesale business in order to gain market share during the destination's slow season. In addition, revenue for the Italian hotels excluding Belmond Hotel Cipriani was up $3.0 million over the prior-year period mainly as a result of leveraging strong demand to drive higher rates. This was offset by a reduction in rates in Belmond Le Manoir aux Quat'Saisons and Belmond Grand Hotel Europe. ADR in U.S. dollar terms for the European owned hotels segment decreased to $676 in the year ended December 31, 2016 from $689 in the year ended December 31, 2015. Occupancy increased to 64% in the year ended December 31, 2016 from 62% in the year ended December 31, 2015. Same store RevPAR increased by 2% in U.S. dollars, to $435 in the year ended December 31, 2016 from $427 in the year ended December 31, 2015, an increase of 4% on a constant currency basis.

2015 compared to 2014

Revenue was $200.0 million for the year ended December 31, 2015, a decrease of $12.7 million, or 6%, from $212.7 million for the year ended December 31, 2014. This decrease was attributable to unfavorable exchange rate movements which contributed to $37.6 million of the revenue decline, following the 37%, 16% and 7% year-over-year depreciation of the Russian ruble, euro and British pound, respectively, against the U.S. dollar. This was partially offset by revenue growth of $24.9 million on a constant currency basis at the Company’s European hotels. The Italian properties were responsible for $15.0 million of this growth, having achieved a 10% increase in constant currency ADR and a 4 percentage-point increase in occupancy. Additionally, Belmond Grand Hotel Europe recorded an increase in revenue of $5.2 million on a constant currency basis, having benefited from increased local and foreign demand and food and beverage growth with the opening of the new “Azia” restaurant. ADR in U.S. dollar terms for the European owned hotels segment decreased to $689 in the year ended December 31, 2015 from $783 in the year ended December 31, 2014. Occupancy increased to 62% in the year ended December 31, 2015 from 56% in the year ended December 31, 2014. Same store RevPAR decreased by 3% in U.S. dollars, to $427 in the year ended December 31, 2015 from $439 in the year ended December 31, 2014, but increased by 19% on a constant currency basis.

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Owned hotels - North America

Year ended December 31,	2016	2015	2014
Rooms Available	256,726	255,216	262,562
Rooms Sold	171,392	171,828	171,967
Occupancy (percentage)	67	67	65
Average daily rate (in U.S. dollars)	421	429	425
RevPAR (in U.S. dollars)	281	289	278

			Change %
Year ended December 31,	2016	2015	Dollars		Constant currency
Same Store RevPAR (in U.S. dollars)	281	289	(3	)%	(2	)%

			Change %
Year ended December 31,	2015	2014	Dollars		Constant currency
Same Store RevPAR (in U.S. dollars)	289	283	2	%	3	%

2016 compared to 2015

Revenue was $145.9 million for the year ended December 31, 2016, a decrease of $2.2 million, or 1%, from $148.1 million for the year ended December 31, 2015. This decrease was largely attributable to a $1.9 million revenue decline at Belmond Maroma Resort & Spa and a $1.2 million decline in revenue at ‘21’ Club by Belmond. Belmond Maroma Resort & Spa was impacted by increased local competition and the re-opening of renovated hotels in the Los Cabos resort area of Mexico. ‘21’ Club by Belmond was negatively impacted by volatility in stock markets as well as disruption caused by neighboring construction noise. This decrease was partially offset by a $1.6 million revenue increase at Belmond Charleston Place. The hotel increased food and beverage revenue largely as a result of a new high-end sports pub that commenced operations in July 2016 and also continued to benefit from improved room product following the Company's three-year rooms renovation project that was completed in December 2015. ADR for the North American owned hotels segment decreased to $421 in the year ended December 31, 2016 from $429 in the year ended December 31, 2015. Occupancy remained flat at 67% in the year ended December 31, 2016 and in the year ended December 31, 2015 . Same store RevPAR decreased by 3% to $281 in the year ended December 31, 2016 from $289 in the year ended December 31, 2015.

2015 compared to 2014

Revenue was $148.1 million for the year ended December 31, 2015, an increase of $5.5 million, or 4%, from $142.6 million for the year ended December 31, 2014. This revenue increase was led by a $2.8 million growth at Belmond El Encanto as it continued to benefit from its second full year of operations. In addition, there was a $2.4 million increase in revenue at Belmond Charleston Place, following increased occupancy and strong ADR growth as a result of the hotel’s renovated room product. Revenue increases of $1.6 million in the other North American owned hotels were offset by the March 2014 sale of Inn at Perry Cabin by Belmond, which had generated revenues of $1.3 million in the year ended December 31, 2014. ADR for the North American owned hotels segment increased to $429 in the year ended December 31, 2015 from $425 in the year ended December 31, 2014. Occupancy decreased to 67% in the year ended December 31, 2015 from 65% in the year ended December 31, 2014. Same store RevPAR (which excludes Inn at Perry Cabin by Belmond) increased by 2% to $289 in the year ended December 31, 2015 from $283 in the year ended December 31, 2014.

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Owned hotels - Rest of world

Year ended December 31,	2016	2015	2014
Rooms Available	376,952	371,207	374,855
Rooms Sold	204,944	211,059	208,106
Occupancy (percentage)	54	57	56
Average daily rate (in U.S. dollars)	388	356	413
RevPAR (in U.S. dollars)	211	202	229

			Change %
Year ended December 31,	2016	2015	Dollars		Constant currency
Same Store RevPAR (in U.S. dollars)	216	207	4	%	9	%

			Change %
Year ended December 31,	2015	2014	Dollars		Constant currency
Same Store RevPAR (in U.S. dollars)	200	233	(14	)%	9	%

2016 compared to 2015

Revenue was $130.3 million for the year ended December 31, 2016, an increase of $5.9 million, or 5%, from $124.4 million in the year ended December 31, 2015. This is principally as a result of revenue growth of $5.0 million or 10% at Belmond Copacabana Palace and revenue growth of $3.1 million at Belmond Safaris. At Belmond Copacabana Palace, the Company successfully capitalized on the 2016 Summer Olympic Games, driving year-over-year ADR and food and beverage revenue growth. Belmond Safaris benefited from being fully operational in 2016, as Belmond Eagle Island Lodge re-opened in December 2015 having been closed from January to November 2015 for a complete renovation. This was partially offset by a revenue decrease of $1.6 million at Belmond La Résidence d'Ankor, which was closed for refurbishment in May 2016 and re-opened in November 2016. ADR in U.S. dollar terms for the Rest of world segment increased by 9% to $388 for the year ended December 31, 2016 from $356 in the year ended December 31, 2015. Occupancy decreased to 54% in the year ended December 31, 2016 from 57% in the year ended December 31, 2015. Same store RevPAR in U.S. dollars (which excludes Belmond Eagle Island Lodge and Belmond La Résidence d'Angkor) increased by 4% to $216 for the year ended December 31, 2016 from $207 in the year ended December 31, 2015, an increase of 9% on a constant currency basis.

2015 compared to 2014

Revenue was $124.4 million for the year ended December 31, 2015, a decrease of $18.3 million, or 13%, from $142.7 million for the year ended December 31, 2014. This decrease was primarily attributable to the $17.7 million combined revenue decline at the Company’s two Brazilian hotels, largely due to the 30% year-over-year depreciation in the Brazilian real against the U.S. dollar. Additionally, there was a decrease in revenue of $3.2 million at Belmond Safaris as a result of the closure of Belmond Eagle Island Lodge for renovation in January 2015. Partially offsetting these decreases in 2015 was a $3.2 million growth at Belmond Miraflores Park, which was closed for renovation from December 2013 to mid-April 2014. ADR in U.S. dollar terms for the Rest of world segment decreased by 14% to $356 for the year ended December 31, 2015 from $413 in the year ended December 31, 2014. Occupancy increased to 57% in the year ended December 31, 2015 from 56% in the year ended December 31, 2014. Same store RevPAR (which excludes Belmond Miraflores Park and Belmond Eagle Island Lodge) decreased by 14% to $200 in the year ended December 31, 2015 from $233 in the year ended December 31, 2014, an increase of 9% on a constant currency basis.

Owned trains and cruises

2016 compared to 2015

Revenue was $59.3 million in the year ended December 31, 2016, a decrease of $6.2 million, or 9%, from $65.5 million in the year ended December 31, 2015. Unfavorable exchange rate movements of $5.9 million resulting from the 11% year-over-year depreciation of the British pound against the U.S. dollar, were partially offset by growth on a constant currency basis of $1.7

43

million at Belmond Grand Hibernian, which commenced operations on August 30, 2016 and generated $1.2 million of revenue in its first few weeks of operations. In addition, on a constant currency basis there was a revenue increase of $1.4 million at Venice-Simplon-Orient-Express due to the increase in number of trips by four in the period. This was offset by a combined revenue decrease of $1.2 million on a constant currency basis at Belmond Road to Mandalay and Belmond Orcaella, the Company’s two river cruise ships in Myanmar, as a result of increased local competition.

2015 compared to 2014

Revenue was $65.5 million in the year ended December 31, 2015, a decrease of $8.8 million, or 12%, from $74.3 million in the year ended December 31, 2014. Exchange rate movements accounted for $4.0 million of the revenue decline, following the 16% and 7% year-over-year depreciation of the euro and British pound, respectively, against the U.S. dollar. There was a combined revenue decrease of $4.6 million at Belmond Orcaella and Belmond Road to Mandalay, Belmond’s two river cruise ships in Myanmar, as a result of increased local competition, and a $1.6 million fall in revenue at Belmond Northern Belle following a reduction in passenger numbers.

Part-owned/ managed hotels

2016 compared to 2015

Revenue was $4.4 million in the year ended December 31, 2016, a decrease of $0.8 million, or 15%, from $5.2 million in the year ended December 31, 2015. This decrease was primarily due to the sale of Hotel Ritz by Belmond in May 2015 which had produced revenues of $0.3 million for the year ended December 31, 2015 and a decline in revenue for the Company's Peru hotels joint venture primarily as a result of a year-over-year decrease in group business at the joint venture’s two hotels in Cusco.

2015 compared to 2014

Revenue was $5.2 million in the year ended December 31, 2015, a decrease of $0.8 million, or 13%, from $6.0 million in the year ended December 31, 2014. This decrease was primarily due to lower management fees received from Hotel Ritz by Belmond which was sold in May 2015.

Part-owned/ managed trains

2016 compared to 2015

Revenue was $10.8 million in the year ended December 31, 2016, an increase of $2.6 million, or 32%, from $8.2 million in the year ended December 31, 2015, resulting from the Company’s PeruRail joint venture which commenced transport of copper concentrate from the Las Bambas mine.

2015 compared to 2014

Revenue was $8.2 million in the year ended December 31, 2015, an increase of $0.8 million, or 11%, from $7.4 million in the year ended December 31, 2014. This was due to an increase in management fees from the Company’s PeruRail joint venture, as a result of an increase in tickets sold and average ticket prices.

In June 2015, PeruRail entered into an agreement for a period of 15 years with a Peruvian subsidiary of MMG Limited, a minerals and mining company that is publicly traded on the Hong Kong stock exchange, to transport copper concentrate from the Las Bambas mine. In connection with this project, PeruRail obtained non-recourse financing of $131 million in February 2016. PeruRail commenced transport of the copper concentrate in January 2016.

Cost of services

2016 compared to 2015

Cost of services was $240.1 million in the year ended December 31, 2016, a decrease of $3.5 million, or 1%, from $243.6 million in the year ended December 31, 2015 . Cost of services as a percentage of revenue remained consistent at 44% for the year ended December 31, 2016 and for the year ended December 31, 2015.

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2015 compared to 2014

Cost of services was $243.6 million in the year ended December 31, 2015, a decrease of $19.0 million, or 7%, from $262.6 million in the year ended December 31, 2014. Cost of services as a percentage of revenue decreased slightly to 44% of revenue for the years ended December 31, 2015 from 45% for the year ended December 31, 2014.

Selling, general and administrative expenses

2016 compared to 2015

Selling, general and administrative expenses was $198.6 million in the year ended December 31, 2016, a decrease of $7.6 million, or 4%, from $206.2 million in the year ended December 31, 2015. Selling, general and administrative expenses as a percentage of revenue decreased to 36% for the year ended December 31, 2016 from 37% for the year ended December 31, 2015.

Central costs within selling, general and administrative expenses were $37.4 million in the year ended December 31, 2016 (including $6.3 million of non-cash share-based compensation), a decrease of $9.4 million, or 20%, from $46.8 million in the year ended December 31, 2015 (including $6.7 million of non-cash share-based compensation). As a percentage of revenue, central costs (excluding non-cash share-based compensation expense) decreased slightly to 6% for the year ended December 31, 2016 from 7% for the year ended December 31, 2015 primarily due to lower legal and professional expenses and payroll savings related to a weaker British pound than in the prior-year.

2015 compared to 2014

Selling, general and administrative expenses was $206.2 million in the year ended December 31, 2015, a decrease of $13.4 million, or 6%, from $219.6 million in the year ended December 31, 2014. Selling, general and administrative expenses as a percentage of revenue remained consistent at 37% for the year ended December 31, 2015 and 2014despite the increase in central costs. This was primarily due to the weakening of the euro and Mexican peso against the U.S. dollar, which in turn has benefited Belmond La Samanna and Belmond Maroma Resort and Spa as these properties incur the majority of their expenses in euros and Mexican pesos, respectively.

Central costs within selling, general and administrative expenses were $46.8 million in the year ended December 31, 2015 (including $6.7 million of non-cash share-based compensation), an increase of $6.4 million, or 16%, from $40.4 million in the year ended December 31, 2014 (including $7.9 million of non-cash share-based compensation). Central costs included $3.7 million of expenses and a $1.8 million credit to share-based compensation expense in relation to the former CEO’s departure. The remaining increase is largely due to additional costs incurred in the year ended December 31, 2015 relating to the migration of the Company's tax residency to the United Kingdom and central marketing costs. As a percentage of revenue, central costs (excluding non-cash share-based compensation expense) increased to 7% for the year ended December 31, 2015 from 6% for the year ended December 31, 2014.

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Segment profit/(loss)

Segment performance is evaluated based upon segment earnings before gains/(losses) on disposal, impairments, central costs, interest income, interest expense, foreign currency, tax (including tax on earnings from unconsolidated companies), depreciation and amortization (“segment profit”). Segment performance for the years 2016, 2015 and 2014 is analyzed as follows:

	2016		2015		2014
Year ended December 31,	$ millions		$ millions		$ millions
Segment profit:
Owned hotels:
Europe	67.6		65.4		62.8
North America	28.8		31.6		24.0
Rest of world	33.1		31.3		36.5
Total owned hotels	129.5		128.3		123.3
Owned trains & cruises	3.8		6.7		7.3
Part-owned/managed hotels	6.3		5.0		5.8
Part-owned/managed trains	25.6		18.9		16.2
Total part-owned/managed	31.9		23.9		22.0
Reconciliation to net earnings/(losses):
Total segment profit	165.2		158.9		152.6
Gain on disposal of property, plant and equipment and equity method investments	0.9		20.3		4.1
Impairment of goodwill	—		(9.8	)	—
Impairment of property, plant and equipment	(1.0	)	—		(1.2	)
Central costs and share-based compensation	(37.4	)	(46.8	)	(40.4	)
Depreciation and amortization	(52.4	)	(50.5	)	(52.0	)
Gain/(loss) on extinguishment of debt	1.2		—		(14.5	)
Other income	—		—		1.3
Interest income, interest expense and foreign currency, net	(19.1	)	(36.2	)	(33.1	)
Provision for income taxes	(16.4	)	(17.0	)	(15.5	)
Share of (provision for)/benefit from income taxes of unconsolidated companies	(5.6	)	(1.5	)	0.7
Earnings from continuing operations	35.4		17.4		2.0
Earnings/(losses) from discontinued operations	1.0		(1.5	)	(3.8	)
Net earnings/(losses)	36.4		15.9		(1.8	)

2016 compared to 2015

The European owned hotels reported segment profit of $67.6 million for the year ended December 31, 2016, an increase of $2.2 million, or 3%, from $65.4 million for the year ended December 31, 2015. This was primarily due to solid performances for the Company's Italian hotels complemented by strong year-over-year growth for the remaining hotels in Europe. Earnings for the Italian hotels excluding Belmond Hotel Cipriani was up $1.7 million over the prior-year mainly as a result of leveraging strong demand to drive higher rates. This was offset by a decrease in earnings of $2.6 million in Belmond Hotel Cipriani due to a challenging comparable period, with earnings in 2015 benefiting from the Biennale art festival, which occurs every other year, as did the World Expo 2015 in Milan, both of which generated increased visitation to Venice. Outside of Italy, the Company recorded meaningful year-over-year increases for Belmond Grand Hotel Europe, Belmond La Residencia, and Belmond Reid's Palace, all primarily as a result of driving demand from new markets coupled with enhanced revenue management. Earnings for Belmond

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Grand Hotel Europe increased $0.8 million or 15% year-over-year largely due to an increase in occupancy that was primarily the result of continued efforts to stimulate business from new markets. The Company continued to drive improved results for Belmond La Residencia, with earnings for the year increasing $1.1 million or 25% over the prior year mainly as a result of leveraging strong demand to drive higher rates. Earnings for Belmond Reid's Palace increased $1.6 million or 37% year on year which largely resulted from the Company's strategic decision to focus on driving wholesale business in order to gain market share during the destination's slow season. As a percentage of European owned hotels revenue, segment profit was 34% in the year December 31, 2016 compared with 33% for the year ended December 31, 2015.

The North American owned hotels reported segment profit of $28.8 million for the year ended December 31, 2016, a decrease of $2.8 million, or 9%, from $31.6 million for the year ended December 31, 2015. This was largely due to a combined earnings decrease of $2.6 million at '21' Club by Belmond, Belmond La Samanna, St. Martin, Belmond Maroma Resort & Spa and Belmond El Encanto. '21' Club by Belmond was negatively impacted by volatility in stock markets as well as disruption caused by neighboring construction noise resulting in an earnings decrease of $0.7 million. Belmond La Samanna suffered a decrease in segment profit of $0.8 million due to a year-over-year decrease in call volume due in part to concern over the Zika virus. In addition, there was a $0.6 million earnings decline at Belmond Maroma Resort & Spa due to increased local competition and the re-opening of renovated hotels in the Los Cabos resort area. Belmond El Encanto recorded a decline in earnings of $0.4 million for the year ended December 31, 2016 due to a fall in food and beverage revenue and a reduction in group business, primarily as a result of a large buyout in the prior year which did not recur in the current year. As a percentage of North American owned hotels revenue, segment profit was 20% for the year ended December 31, 2016 compared with 21% for the year ended December 31, 2015.

The Rest of world owned hotels reported segment profit of $33.1 million for the year ended December 31, 2016, an increase of $1.8 million, or 6%, from $31.3 million for the year ended December 31, 2015. Unfavorable exchange rate movements of $1.4 million resulting from the year-over-year depreciation largely of the Brazilian real and South African rand against the U.S. dollar, were offset by growth on a constant currency basis of $3.2 million, particularly at Belmond Copacabana Palace, Belmond Mount Nelson Hotel and Belmond Safaris. At Belmond Copacabana Palace, the Company successfully capitalized on the 2016 Summer Olympic Games, driving year-over-year ADR and food and beverage revenue growth for the third quarter of 2016. Belmond Mount Nelson Hotel achieved strong constant currency ADR growth due to the investments made to renovate the hotel’s room product over the past several years. Belmond Mount Nelson Hotel also benefited from the year-over-year depreciation of the South African rand which has increased the number of international tourists to the area. Belmond Safaris recorded an earnings increase of $1.8 million on a constant currency basis, primarily due to the reopening of Belmond Eagle Island Lodge, one of the three safari camps in Botswana, which closed for renovations in January 2015. The increases in segment profit were somewhat offset by decreases in segment profit on a constant currency basis at Belmond Cataratas and Belmond La Residence d'Angkor of $1.3 million and $1.1 million, respectively. Belmond Cataratas suffered from a decrease in occupancy due to in part to concerns over the Zika virus and a post-Olympics lull. Belmond La Résidence d'Angkor was closed for refurbishment in May 2016 and re-opened in November 2016. As a percentage of Rest of world owned hotels revenue, segment profit margin was consistent at 25% for the years ended December 31, 2016 and 2015.

The Owned trains and cruises reported segment profit of $3.8 million for the year ended December 31, 2016, a decrease of $2.9 million, or 43%, from $6.7 million for the year ended December 31, 2015. This was predominately due to combined earnings growth of $0.5 million at Belmond British Pullman and Belmond Northern Belle offset by a combined earnings decrease of $1.1 million at Belmond Road to Mandalay and Belmond Orcaella, the Company’s river cruise ships in Myanmar, as a result of increased local competition. Segment profit for Belmond Royal Scotsman was down $0.3 million on a constant currency basis or 18% primarily as a result of operating two fewer trips in the current-year. Earnings decreased by $1.1 million at Venice Simplon-Orient-Express due to higher costs incurred as a result of unfavorable exchange rate movements. As a percentage of owned trains and cruises revenue, segment profit decreased to 6% for the year ended December 31, 2016 from 10% for the year ended December 31, 2015 due to higher costs incurred than the prior year.

The Part-owned/ managed hotels reported segment profit of $6.3 million for the year ended December 31, 2016, an increase of $1.3 million, or 26%, from $5.0 million for the year ended December 31, 2015. This is primarily due to the sale of Hotel Ritz by Belmond in May 2015 which produced segment losses of $1.9 million for the year ended December 31, 2015.

The Part-owned/ managed trains reported segment profit of $25.6 million for the year ended December 31, 2016, an increase of $6.7 million, or 35%, from $18.9 million for the year ended December 31, 2015, primarily due to the Company’s PeruRail joint venture commencing transport of copper concentrate from the Las Bambas mine, which began production in January 2016.

2015 compared to 2014

The European owned hotels reported segment profit of $65.4 million for the year ended December 31, 2015, an increase of $2.6 million, or 4%, from $62.8 million for the year ended December 31, 2014. This increase was mainly attributable to earnings growth

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at the Italian properties and Belmond Reid's Palace of $1.8 million and $0.8 million, respectively, following strong occupancy growth and despite the weakening of the euro, partially offset by a $0.5 million fall in segment profit at Belmond Grand Hotel Europe primarily as a result of the depreciation of the Russian ruble against the U.S. dollar. As a percentage of European owned hotels revenue, segment profit was 33% for the year ended December 31, 2015 compared with 30% for the year ended December 31, 2014.

The North American owned hotels reported segment profit of $31.6 million for the year ended December 31, 2015, an increase of $7.6 million, or 32%, from $24.0 million for the year ended December 31, 2014. There was an increase in earnings of $2.0 million at Belmond La Samanna, which was negatively impacted in 2014 by a mosquito-borne virus in St. Martin and elsewhere in the Caribbean which did not recur in 2015, and also benefited from the impact of the weaker euro on its cost base. In addition, Belmond Maroma Resort & Spa recorded earnings growth of $1.8 million following a 4% increase in ADR and payroll costs savings, and Belmond El Encanto and Belmond Charleston Place reported increases in earnings of $1.6 million and $0.8 million, respectively. As a percentage of North American owned hotels revenue, segment profit was 21% for the year ended December 31, 2015 compared with 17% for the year ended December 31, 2014.

The Rest of world owned hotels reported segment profit of $31.3 million for the year ended December 31, 2015, a decrease of $5.2 million, or 14%, from $36.5 million for the year ended December 31, 2014. There was a fall in segment profit of $8.7 million at Belmond Copacabana Palace in 2015 following the depreciation of the Brazilian real against the U.S. dollar and the effect of a strong comparative year as a result of the 2014 FIFA World Cup, and a fall of $1.7 million at Belmond Safaris due to the closure of Belmond Eagle Island Lodge. Partially offsetting these declines was a $2.8 million earnings growth at Belmond Miraflores Park, which was closed for renovation during the beginning months of 2014 and a $1.8 million earnings growth at Belmond Mount Nelson Hotel following increased occupancy. As a percentage of Rest of world owned hotels revenue, segment profit margin was 25% for the year ended December 31, 2015 compared with 26% for the year ended December 31, 2014.

The Owned trains and cruises reported segment profit of $6.7 million for the year ended December 31, 2015, a decrease of $0.6 million, or 8%, from $7.3 million for the year ended December 31, 2014. This was predominantly due to earnings growth at Venice Simplon-Orient-Express of $2.0 million being offset by declines in segment profit at the Company’s two river cruises in Myanmar of $2.5 million as a result of increased local competition. As a percentage of owned trains and cruises, segment profit was consistent at 10% for the years ended December 31, 2015 and 2014.

The Part-owned/managed hotels reported segment profit of $5.0 million for the year ended December 31, 2015, a decrease of $0.8 million, or 14%, from $5.8 million for the year ended December 31, 2014. This was primarily due to a segment loss of $1.9 million recognized for Hotel Ritz by Belmond in the year ended December 31, 2015 as a result of additional costs incurred by the joint venture in association with its sale in May 2015, compared with a segment loss of $0.6 million recorded in the year ended December 31, 2014. See Note 6 to the Financial Statements.

The Part-owned/ managed trains reported segment profit of $18.9 million for the year ended December 31, 2015, an increase of $2.7 million, or 17%, from $16.2 million for the year ended December 31, 2014, due to an increase in average ticket prices and the number of passenger tickets sold at the Company's PeruRail joint venture.

Gain on disposal of property, plant and equipment and equity method investments

2016 compared to 2015

A gain on disposal of $0.9 million was recognized in the year ended December 31, 2016 compared with a $20.3 million gain in the year ended December 31, 2015. The gain in the in the year ended December 31, 2016 relates to the recognition of the $0.6 million deferred gain following the March 2014 sale of Inn at Perry Cabin by Belmond, which Belmond has continued to manage under a management contract. The remainder of the 2016 gain relates to the gain on sale of the spa building at Belmond Casa de Sierra Nevada, Mexico in September 2016. $19.7 million of the gain recorded in 2015 relates to Hotel Ritz by Belmond, the Company’s hotel joint venture in Spain, which was sold on May 21, 2015, with the remainder relating to the recognition of the deferred gain following the 2014 sale of Inn at Perry Cabin by Belmond.

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2015 compared to 2014

A gain on disposal of $20.3 million was recognized in the year ended December 31, 2015 compared with a $4.1 million gain in the year ended December 31, 2014. $19.7 million of the gain recorded in 2015 relates to Hotel Ritz by Belmond, the Company’s hotel joint venture in Spain, which was sold on May 21, 2015, with the remainder relating to the recognition of the deferred gain following the 2014 sale of Inn at Perry Cabin by Belmond. The gain in the prior year relates solely to Inn at Perry Cabin by Belmond, which was sold on March 21, 2014. The disposal resulted in a gain of $6.7 million, of which $3.7 million was recognized on completion on March 21, 2014 and $3.0 million, relating to Belmond’s key money contribution, was deferred and is being recognized over the initial period of the management contract. Due to Belmond's continuing involvement in managing the hotel, the results of operations of Inn at Perry Cabin by Belmond and the gain on disposal have been recorded within continuing operations.

Impairment of goodwill

2016 compared to 2015

There were no impairments of goodwill for the year ended December 31, 2016. A goodwill impairment charge of $9.8 million was recorded in the year ended December 31, 2015. This consisted of $4.1 million at Belmond Grand Hotel Europe, $3.6 million at Belmond Jimbaran Puri Bali, $1.4 million at Belmond La Residence Pho Vao, Luang Prabang, Laos and $0.7 million at Belmond Northern Belle. See Note 8 for consideration of potential impairment triggers.

2015 compared to 2014

A goodwill impairment charge of $9.8 million was recorded in the year ended December 31, 2015. This consisted of $4.1 million at Belmond Grand Hotel Europe, $3.6 million at Belmond Jimbaran Puri Bali, $1.4 million at Belmond La Residence Phou Vao, and $0.7 million at Belmond Northern Belle. There were no impairments to goodwill of continuing operations recorded in the year ended December 31, 2014.

Impairment of property, plant and equipment

2016 compared to 2015

A property, plant and equipment impairment charge of $1.0 million was recorded for the year ended December 31, 2016 which related to the write-down to fair value of property, plant and equipment at Belmond Orcaella, one of the Company's river cruises in Myanmar. There were no impairments of property, plant and equipment in the year ended December 31, 2015. See Note 7 for consideration of potential impairment triggers.

2015 compared to 2014

There were no impairments of property, plant and equipment in the year ended December 31, 2015.

In the year ended December 31, 2014, Belmond identified and recorded a non-cash property, plant and equipment charge of $1.2 million relating to the write-down to fair value of train carriages of Belmond's former Great South Pacific Express train, which were at the time held in Australia and were not in service.

Depreciation and amortization

2016 compared to 2015

Depreciation and amortization was $52.4 million in the year ended December 31, 2016, an increase of $1.9 million, or 4%, from $50.5 million in the year ended December 31, 2015. Depreciation and amortization as a percentage of revenue increased slightly to 10% for the year ended December 31, 2016 from 9% for the year ended December 31, 2015. This is primarily due to a $1.3 million accelerated depreciation charge on assets as part of the renovation project at Belmond La Residence d'Angkor.

2015 compared to 2014

Depreciation and amortization was $50.5 million in the year ended December 31, 2015, a decrease of $1.5 million, or 3% from $52.0 million in the year ended December 31, 2014. Depreciation and amortization as a percentage of revenue remained consistent at 9% for the years ended December 31, 2015 and 2014.

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Gain/(loss) on extinguishment of debt

2016 compared to 2015

For the year ended December 31, 2016, there was a gain on extinguishment of debt of $1.2 million. Charleston Center LLC refinanced its $86.0 million loan secured on its real and personal property with an amended $112.0 million loan. The additional proceeds of $26.0 million were largely used to repay a 1984 development loan from a municipal agency in the principal amount of $10.0 million and accrued interest of $16.8 million. There was a cash outflow of $22.8 million to repay this loan and accrued interest, reflecting a discount of $4.0 million which was negotiated due to the early repayment of this loan. The net gain on extinguishment of debt reported in the statements of consolidated operations was $1.2 million after accounting for a tax indemnity of $2.8 million to our partners in respect of their income from the discount arising on the cancellation of indebtedness. There was no loss/gain on extinguishment of debt for the year ended December 31, 2015.

2015 compared to 2014

There was no gain/loss on extinguishment of debt for the year ended December 31, 2015.

Loss on extinguishment of debt was $14.5 million for the year ended December 31, 2014, comprising costs associated with the March 2014 corporate debt refinancing, including an $8.9 million write-off of unamortized deferred financing costs, $4.0 million in swap cancellation costs and $1.3 million of fees to prepay Belmond’s previous loans.

Other income

2016 compared to 2015

There was no other income recognized in the years ended December 31, 2016 and 2015.

2015 compared to 2014

There was no other income recognized in the year ended December 31, 2015.

Other income of $1.3 million was recognized in the year ended December 31, 2014. This related to the release of the remaining contingent liability that was originally recorded as part of the consideration for the acquisition of Belmond Grand Hotel Timeo and Belmond Villa Sant'Andrea in January 2010. Belmond had agreed to pay the vendor a further €5,000,000 (equivalent to $7,064,000 at date of acquisition) if, by 2015, additional rooms were constructed at Belmond Grand Hotel Timeo and certain required permits were granted to expand and add a swimming pool to Belmond Villa Sant'Andrea. At December 31, 2014, €4,000,000 has been paid ( equivalent to $5,250,000 at the dates paid) as the Belmond Villa Sant'Andrea permits were granted. The remaining contingent consideration was released in December 2014 as the conditions for its payment were not met.

Interest income, interest expense and foreign currency, net

2016 compared to 2015

Interest income, interest expense and foreign currency, net was an expense of $19.1 million for the year ended December 31, 2016, a decrease of $17.1 million, or 47%, from an expense of $36.2 million for the year ended December 31, 2015. The decrease in net expense was primarily due to a foreign exchange gain of $9.2 million that was recognized in the year ended December 31, 2016 due to recent volatility in the British pound and euro foreign exchange rates, compared to a foreign exchange loss of $5.0 million in the year ended December 31, 2015.

2015 compared to 2014

Interest income, interest expense and foreign currency, net was an expense of $36.2 million for the year ended December 31, 2015, an increase of $3.1 million, or 9%, from an expense of $33.1 million for the year ended December 31, 2014. In the year ended December 31, 2015 there was a foreign exchange loss recognized of $5.0 million compared with a gain of $2.3 million recognized in the year ended December 31, 2014. This was partially offset by a decrease in interest expense in the year ended December 31, 2015 resulting from the release of a provision for a withholding tax assessment previously classified as interest.

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Provision for income taxes

2016 compared to 2015

The provision for income taxes was $16.4 million in the year ended December 31, 2016, a decrease of $0.6 million, or 4%, from $17.0 million in the year ended December 31, 2015. The decrease in tax charge in the year ended December 31, 2016 was mainly as a result of a reduction in provision for uncertain tax position of $3.4 million following settlements agreed in October 2016, which was partially offset by an increase in earnings before income taxes in the United States, Italy, Brazil and other territories. The effective tax rate is higher than the UK statutory tax rate mainly because the Company operates in a number of territories which have higher statutory tax rates than the UK.

2015 compared to 2014

The provision for income taxes was $17.0 million in the year ended December 31, 2015, an increase of $1.5 million, or 10%, from $15.5 million in the year ended December 31, 2014. The increase in tax expense was principally due to an increase in earnings before income taxes in the United States, Italy, Peru and other territories.

Earnings from unconsolidated companies, net of tax

2016 compared to 2015

Earnings from unconsolidated companies, net of tax was $11.0 million in the year ended December 31, 2016, an increase of $1.9 million, or 21%, from $9.1 million in the year ended December 31, 2015. This was largely due to increased net profits achieved at the Company’s PeruRail joint venture.

2015 compared to 2014

Earnings from unconsolidated companies, net of tax was $9.1 million in the year ended December 31, 2015, a decrease of $0.4 million, or 4%, from $9.5 million in the year ended December 31, 2014. There was a tax charge of $1.5 million recognized in relation to earnings from unconsolidated companies in the year ended December 31, 2015 compared with a tax credit of $0.7 million in the year ended December 31, 2014. The tax credit in the year ended December 31, 2014 was due to the reduction in enacted tax rates in Peru and Spain.

Net earnings/(losses) from discontinued operations

2016 compared to 2015

The net earnings from discontinued operations for the year ended December 31, 2016 were $1.0 million, compared to net losses of $1.5 million for the year ended December 31, 2015.

Net earnings from discontinued operations for the year ended December 31, 2016 comprised of the reimbursement of overpaid legal fees in relation to Ubud Hanging Gardens, as Belmond is pursuing legal remedies following the wrongful dispossession by the owner in November 2013 (see Notes 4 and 19 to the Financial Statements) and residual operating losses from Porto Cupecoy which was sold in January 2013. In addition, the results of discontinued operations for the year ended December 31, 2016 included earnings of $963,000 at Porto Cupecoy due to the release of a provision in respect of tax claims that Belmond believes it is now effectively discharged from. See Note 19.

Net losses from discontinued operations for the year ended December 31, 2015 included legal fees of $0.6 million in relation to Belmond's wrongful dispossession from its leasehold interest in Ubud Hanging Gardens and residual operating losses of $0.9 million at Porto Cupecoy.

2015 compared to 2014

Net losses from discontinued operations for the year ended December 31, 2015 were $1.5 million, compared to net losses of $3.8 million for the year ended December 31, 2014.

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Net losses from discontinued operations for the year ended December 31, 2015 included legal fees of $0.6 million in relation to Ubud Hanging Gardens, as Belmond is pursuing legal remedies following the wrongful dispossession by the owner in November 2013 and residual operating losses of $0.9 million at Porto Cupecoy.

Net losses from discontinued operations for the year ended December 31, 2014 included legal fees of $1.5 million in relation to Belmond's wrongful dispossession from its leasehold interest in Ubud Hanging Gardens and residual operating losses of $1.6 million at Porto Cupecoy.

Other comprehensive losses: Foreign currency translation adjustments, net

2016 compared to 2015

Foreign currency translation adjustments for the year ended December 31, 2016 were a loss of $11.0 million compared to a loss of $88.2 million for the year ended December 31, 2015 arising from the retranslation of Belmond’s net investment in subsidiary accounts denominated in foreign currencies into the Company’s reporting currency of U.S. dollars.

The loss in the year ended December 31, 2016 was driven by a 3% and 17% depreciation, of the euro and the British pound against the U.S. dollar from the rate at December 31, 2015, negatively impacting the carrying value of Belmond's net investments denominated in those currencies. The improvement in loss in the year ended December 31, 2016 from the loss in the year ended December 31, 2015 was due to a 20%, 20% and 13% appreciation, respectively, of the Brazilian real, Russian ruble and the South African rand against the U.S. dollar from the rate at December 31, 2015 positively impacted the carrying value of Belmond’s net investments denominated in those currencies.

2015 compared to 2014

Foreign currency translation adjustments for the year ended December 31, 2015 were a loss of $88.2 million compared to a loss of $151.0 million for the year ended December 31, 2014. The loss in the year ended December 31, 2015 largely resulted from the retranslation of Belmond’s net investment in subsidiary accounts denominated in foreign currencies into the Belmond’s reporting currency of U.S. dollars as the majority of Belmond's operating currencies have depreciated against the U.S. dollar during the year. The loss was driven by a 32%, 23% and 10% depreciation, respectively, of the Brazilian real, Russian ruble and euro against the U.S. dollar from the rate at December 31, 2014, negatively impacting the carrying value of Belmond’s net investments denominated in those currencies.

The foreign currency translation adjustment loss for the year ended December 31, 2014 was partially due to the 72% and 14% depreciation, respectively, of the Russian ruble and euro against the U.S. dollar, and partially due to a loss of $49.4 million arising on the remeasurement of non-monetary assets and liabilities of Belmond’s Brazilian operations following a change in the functional currency of those entities. Prior to 2014, Belmond’s Brazilian operations used the U.S. dollar as their functional currency. Effective January 1, 2014, Belmond changed the functional currency to the Brazilian real. Belmond believes that the growth in the Brazilian operations’ real-denominated revenues and expenses indicated a change in the economic facts and circumstances that justified the change in the functional currency.

Liquidity and Capital Resources

Overview

Belmond's primary short-term cash needs include payment of compensation, general business expenses, capital commitments and contractual payment obligations, which include principal and interest payment on its debt facilities. Long-term liquidity needs may include existing and ongoing property refurbishments, potential investment in strategic acquisitions, and the repayment of long-term debt. At December 31, 2016, total debt and obligations under capital leases, including debt of consolidated variable interest entities, amounted to $602.1 million (2015 - $596.5 million), including a current portion of $5.3 million (2015 - $5.3 million). See Note 10 to the Financial Statements. Additionally, Belmond had capital commitments at December 31, 2016 amounting to $7.8 million (2015 - $8.7 million).

Belmond had cash and cash equivalents of $153.4 million at December 31, 2016, compared to $135.6 million at December 31, 2015. In addition, Belmond had restricted cash balances of $2.6 million, of which $1.8 million is classified as restricted cash on the balance sheet and $0.8 million is classified in other assets (2015 - $3.3 million, of which $2.6 million is classified as restricted cash and $0.7 million is classified in other assets). At December 31, 2016, there were undrawn amounts available to Belmond under committed short-term lines of credit of $105.5 million (2015 - $106.1 million), bringing total cash availability at December 31,

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2016 to $258.9 million (2015 - $241.7 million), excluding restricted cash. When assessing liquidity, Belmond management considers the availability of those cash resources held within local business units to meet the strategic needs of Belmond.

At December 31, 2016, Belmond had $5.3 million of scheduled debt repayments due within one year. Belmond expects to meet these repayments and fund working capital and capital expenditure commitments for the foreseeable future from cash resources, operating cash flow and available committed borrowing.

In order to ensure that Belmond has sufficient liquidity for the future, Belmond’s cash flow projections and available funds are reviewed with the Company’s board of directors on a regular basis.

Recent Events Affecting Belmond's Liquidity and Capital Resources

In March 2015, Belmond’s board of directors approved a program enabling the Company to repurchase its shares of class A common stock up to the value of $75.0 million. During the year ended December 31, 2016, Belmond repurchased and retired 233,393 shares of class A common stock at a weighted average price of $8.54 per share and an aggregate purchase price of approximately $2.0 million. The shares repurchased represented approximately 0.2% of the Company's total shares of class A common stock outstanding prior to the repurchase. To date the Company has acquired 3,574,667 shares of class A common stock for consideration of $40.0 million.

Covenant Compliance

Belmond is financed with a $489.0 million secured term loan and a $105.0 million revolving credit facility. The credit agreement limits Belmond’s ability to incur additional debt unless certain covenants are met. These covenants are measured on the performance of the consolidated group. The revolving credit facility in the credit agreement contains two financial covenants, a maximum net leverage test and a minimum interest cover test, which are both measured quarterly based on Belmond’s trailing 12 months results. In addition, there is debt held by consolidated variable interest entities of $113.1 million relating to Charleston Center LLC. One of the loans ($112.0 million) contains two financial covenants, a minimum interest cover test and minimum debt service ratio, both measured quarterly based on the trailing 12 months results of Charleston Center LLC.

If Belmond does not comply with its financial covenants and the banks that provide the revolving credit facility declare a default and accelerate the repayment of their debt, this will cause an event of default under the credit agreement. The cross default threshold in the credit agreement to other debt that is recourse to Belmond is $25.0 million.

Belmond closely monitors projected covenant compliance, and if there were a possibility of non-compliance with a covenant, Belmond would proactively meet with the agent or lending bank or banks of the relevant facility to seek an amendment or waiver. Obtaining a waiver may result in additional bank fees or an increase in the interest cost.

Based on its current financial forecasts, Belmond believes it will comply with all of the financial covenants in its loan facilities.

Working Capital

Current assets less current liabilities, including the current portion of long-term debt, resulted in a working capital surplus of $107.4 million at December 31, 2016 (December 31, 2015 - $91.2 million).

Cash Flow - Sources and Uses of Cash

At December 31, 2016 and 2015, Belmond had cash and cash equivalents of $153.4 million and $135.6 million, respectively. In addition, Belmond had restricted cash balances of $2.6 million (of which $1.8 million is classified as current restricted cash on the consolidated balance sheet and $0.8 million is classified in other assets) and $3.3 million (of which $2.6 million is classified as current restricted cash on the consolidated balance sheet and $0.7 million is classified in other assets) as of December 31, 2016 and December 31, 2015, respectively.

Operating Activities. Net cash provided by operating activities for the year ended December 31, 2016 was $61.5 million compared to $67.9 million for the year ended December 31, 2015 and $51.3 million for the year ended December 31, 2014.

The primary driver of operating cash flows is the result for the period, adjusted for any non-cash components. Net earnings from continuing operations were $35.4 million for the year ended December 31, 2016, an improvement of $18.0 million compared to earnings of $17.4 million for the year ended December 31, 2015. During the year ended December 31, 2016, there was a $14.3 million cash outflow to settle accrued interest on Charleston Center LLC’s 1984 development loan from a public agency and a

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$1.2 million gain on extinguishment of debt. See Financing Activities below and Note 10 to the Financial Statements for further information. In addition, during the year ended December 31, 2015, the Company recorded a non-cash gain on disposal of $19.7 million in relation to the sale of Belmond's equity method investment in Hotel Ritz by Belmond and goodwill impairments totaling $9.8 million in relation to the goodwill of Belmond Grand Hotel Europe, Belmond Jimbaran Puri, Belmond La Résidence Phou Vao and Belmond Northern Belle, non-cash items affecting net cash used in operating activities which did not recur in the year ended December 31, 2016. Lastly, operating cash flows were affected by the fact that net earnings from continuing operations for the year ended December 31, 2016, included a non-cash gain from foreign currency translation of $9.2 million, compared to a non-cash loss from foreign currency translation of $5.0 million for the year ended December 31, 2015.

Net earnings from continuing operations were $17.4 million for the year ended December 31, 2015, an improvement of $15.4 million compared to earnings of $2.0 million for the year ended December 31, 2014. In addition, during the year ended December 31, 2014 Belmond paid swap termination costs of $4.0 million and key money in relation to the management agreement of Inn at Perry Cabin by Belmond of $3.0 million, neither of which cash outflows recurred in the year ended December 31, 2015. This improvement is offset in cash terms by the fact that the net earnings for the year ended December 31, 2014 included a loss on extinguishment of debt of $14.5 million. Additional non-cash items affecting the calculation of net cash provided by operating activities included impairments totaling $9.8 million in the year ended December 31, 2015 in relation to the goodwill of Belmond Grand Hotel Europe, Belmond Jimbaran Puri, Belmond La Résidence Phou Vao and Belmond Northern Belle, compared to a $1.2 million in the year ended December 31, 2014 in relation to the property, plant and equipment of Belmond's former Great South Pacific Express train which was held in Australia and was not in service. The year ended December 31, 2015 also included a non-cash gain on disposal of $19.7 million in relation to the sale of Belmond's equity method investment in Hotel Ritz by Belmond, compared to a gain on disposal of property, plant and equipment of $4.1 million in relation to the sale of Inn at Perry Cabin by Belmond recognized in the year ended December 31, 2014.

Investing Activities. Net cash used in investing activities for the year ended December 31, 2016 was $52.4 million compared to $17.4 million for the year ended December 31, 2015 and $22.4 million for the year ended December 31, 2014.

Capital expenditure of $55.1 million during the year ended December 31, 2016 included $8.1 million at Belmond Charleston Place related to the cost of adding a new high-end sports pub which opened in July 2016 as well as for roof replacement works, $5.3 million on the Venice Simplon-Orient-Express related to statutory maintenance works and the phased installation of air-conditioning, $5.2 million at Belmond La Residence d’Angkor primarily for a rooms renovation project, $5.2 million at Belmond Mount Nelson Hotel for the renovation of rooms in the hotel's main building, $4.5 million on the Belmond Grand Hibernian luxury sleeper train which commenced operations in August 2016, with the balance being for routine capital expenditures.

Capital expenditure of $56.4 million during the year ended December 31, 2015 included $10.5 million at Belmond Charleston Place primarily for the hotel's rooms renovation project, $6.0 million at Belmond Safaris primarily for the renovation of Belmond Eagle Island Lodge, $5.5 million for construction of the Belmond Grand Hibernian luxury sleeper train, $4.3 million at Belmond Grand Hotel Europe primarily for the renovation of the hotel's main kitchen and new restaurant, $4.1 million on the Venice Simplon-Orient-Express and Belmond British Pullman primarily related to statutory safety works, $3.5 million at Belmond Hotel Cipriani primarily for the renovation of 16 rooms in the hotel's main building, $2.9 million at Belmond Mount Nelson Hotel primarily for the renovation of banqueting and meeting rooms, $2.2 million at Belmond La Residencia primarily for a new bar and refurbishment of 12 junior suites, $2.1 million at Belmond Hotel Splendido primarily for the refurbishment of ten rooms, $2.1 million at Belmond Villa San Michele primarily for a new function facility and $2.1 million at Belmond Villa Sant' Andrea primarily to purchase an adjacent property and beach concession, with the balance being for routine capital expenditures.

Capital expenditure of $63.5 million during the year ended December 31, 2014 included $15.3 million at Belmond Charleston Place primarily for the first and second phases of the hotel’s rooms renovation project, $10.7 million at Belmond Grand Hotel Europe primarily for the conversion of 19 historic rooms into six suites and renovations of the hotel’s restaurants and meeting rooms, $5.0 million at Belmond Miraflores Park for the hotel’s renovation, $3.9 million at Belmond Hotel Cipriani primarily for the renovation of the hotel’s new Oro restaurant, $3.1 million at Belmond Hotel Splendido primarily for the renovation of several of the hotel’s rooms and suites, $2.9 million at Belmond Villa Sant’Andrea primarily for the six junior suites that opened in May 2014, $2.7 million at Belmond Copacabana Palace for the renovation of the hotel’s new MEE restaurant and other routine capital expenditure, $3.8 million on the Venice Simplon-Orient-Express and Belmond British Pullman primarily related to statutory maintenance works, $2.4 million at Belmond Mount Nelson Hotel primarily for the renovation of 26 suites and cottages and $2.3 million at Belmond Le Manoir aux Quat’Saisons primarily for the construction of a new conservatory in the hotel’s garden, with the balance being for routine capital expenditures.

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In addition, during the year ended December 31, 2016, disposal of the trains and carriages that were formerly operated as the Great South Pacific Express and a spa building at Belmond Casa de Sierra Nevada resulted in net cash proceeds of $2.7 million. The disposal of the spa building resulted in a gain of $0.3 million, which was recognized on completion and is reported within gain on sale from property, plant and equipment and equity method investments. No gain or loss arose on disposal of the train carriages.

During the year ended December 31, 2015, disposal of Belmond's equity method investment in Hotel Ritz by Belmond resulted in net cash proceeds of $43.7 million. The disposal resulted in a gain of $19.7 million, which was recognized on completion and is reported within gain on sale from property, plant and equipment and equity method investments.

During the year ended December 31, 2014, disposal of non-core assets of Inn at Perry Cabin by Belmond resulted in net cash proceeds of $37.8 million. The disposal resulted in a gain of $6.7 million, of which $3.7 million was recognized on completion on March 21, 2014 and $3.0 million, relating to Belmond’s key money contribution, was deferred to be recognized over the initial period of the management contract. Belmond continues to manage the hotel for the new owner under a management agreement with a ten-year term that permits termination on the fifth anniversary of the agreement. Due to Belmond's continuing involvement in managing the hotel, its results are presented within continuing operations.

Release of restricted cash was $0.5 million for the year ended December 31, 2015 compared to $11.3 million for the year ended December 31, 2014. The increase in the release of restricted cash in the year ended December 31, 2014 was driven by the repayment of the outstanding property level funded debt of Belmond with the exception of Charleston Center LLC, a consolidated VIE, which took place in March 2014. Cash deposits were previously required to be held with lending banks to support Belmond's payment of interest and principal. There was a smaller increase in restricted cash in the year ended December 31, 2016 and 2015, attributable to the fact that these cash deposits with lending banks are no longer required, with the exception of the debt held by Charleston Center LLC.

Financing Activities. Net cash provided by financing activities for the year ended December 31, 2016 was $9.6 million compared to cash used in financing activities of $43.8 million for the year ended December 31, 2015 and cash used in financing activities of $10.9 million for the year ended December 31, 2014.

During the year ended December 31, 2016, Charleston Center LLC refinanced its $86.0 million loan secured on its real and personal property with an amended $112.0 million loan. The additional proceeds of $26.0 million was largely used to repay a 1984 development loan from a municipal agency in the principal amount of $10.0 million and accrued interest of $16.8 million. There was a cash outflow of $22.8 million to repay this loan and accrued interest, reflecting a discount of $4.0 million which was negotiated due to the early repayment of this loan. The net gain on extinguishment of debt reported in the statements of consolidated operations was $1.2 million after accounting for a tax indemnity of $2.8 million to our partners. Including this refinancing, principal repayments under long-term debt were therefore $13.9 million for the year ended December 31, 2016 compared to $5.4 million for the year ended December 31, 2015.

The year ended December 31, 2016 included a cash outflow of $2.0 million in relation to repurchases of Belmond's shares of class A common stock, compared to $37.6 million in the year ended December 31, 2015.

During the year ended December 31, 2014, Belmond drew $5.4 million of loans to fund capital expenditure at Belmond Miraflores Park and Belmond Grand Hotel Europe and refinanced a $12.0 million loan secured on Belmond Mount Nelson Hotel. Subsequent to these drawdowns, Belmond entered into a $552.0 million secured term loan, the proceeds of which were used to repay all outstanding funded debt of Belmond apart from the debt of Charleston Center LLC, a consolidated VIE, and the debt of Belmond’s unconsolidated joint venture companies. In August 2014, the debt of Charleston Center LLC was refinanced, resulting in an additional drawdown of $2.8 million. Principal repayments under long-term debt were $565.1 million for the year ended December 31, 2014.

Cash Flows from Discontinued Operations. The results of Ubud Hanging Gardens and Porto Cupecoy, have been presented as discontinued operations for all periods presented. Ubud Hanging Gardens has been accounted for as a discontinued operation following an unannounced dispossession of Belmond from the hotel by the owner in November 2013. See Notes 4 and 19 to the Financial Statements.

Net cash provided by/(used in) operating activities comprises the results of operations for the discontinued operations noted above and the movement in their assets and liabilities. Earnings from discontinued operations were $1.0 million for the year ended December 31, 2016, compared to losses of $1.5 million for the year ended December 31, 2015 and losses of $3.8 million for the year ended December 31, 2014. The earnings from discontinued operations for the year ended December 31, 2016 largely relates to the release of a provision at Porto Cupecoy in respect of tax claims that Belmond believes it is now effectively discharged from. See Note 19. The results of discontinued operations for the years ended December 31, 2015 and 2014 include legal fees of $0.6

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million and $1.5 million, respectively, in relation to Ubud Hanging Gardens, as Belmond is pursuing legal remedies following its wrongful dispossession by the owner.

Capital Commitments

Belmond routinely makes capital expenditures to enhance its business. These capital expenditures relate to maintenance, improvements to existing properties and investment in new properties. These capital commitments are expected to be funded through current cash balances, cash flows from operations, existing debt facilities.

There were $7.8 million of capital commitments outstanding at December 31, 2016 (2015 - $8.7 million) relating to project developments and refurbishment for existing properties.

Indebtedness

At December 31, 2016, Belmond had $602.1 million (2015 - $596.5 million) of consolidated debt and obligations under capital leases, including the current portion and including debt held by consolidated variable interest entities. Total debt on the consolidated balance sheets at December 31, 2016 of $591.1 million (2015 - $582.9 million) is net of the unamortized original issue discount of $1.5 million (2015 - $1.9 million) and unamortized debt issuance costs of $9.5 million (2015 - $11.7 million), both of which will be amortized through interest expense over the term of the loans.

Belmond is financed with a $489.0 million secured term loan and a $105.0 million revolving credit facility.

The term loan has two tranches, a U.S. dollar tranche ($335.5 million currently outstanding) and a euro-denominated tranche (€145.9 million currently outstanding, equivalent to $153.5 million as at December 31, 2016). The dollar tranche bears interest at a rate of LIBOR plus 3% per annum, and the euro tranche bears interest at a rate of EURIBOR plus 3% per annum. Both tranches are subject to a 1% interest rate floor. The loan matures in 2021 and the annual mandatory amortization is 1% of the principal amount.

The revolving credit facility matures in March 2019 and bears interest at a rate of LIBOR plus 2.75% per annum, with a commitment fee of 0.4% paid on the undrawn amount. At December 31, 2016 the facility was undrawn and including other working capital facilities, the Company has $105.5 million available to draw.

The term loan and revolving credit facility are secured by pledges of shares in certain subsidiaries and by security interests in tangible and intangible personal property. There are no mortgages over real estate.

The weighted average duration of Belmond’s debt, including debt held by consolidated variable interest entities, is 3.9 years, and the weighted average interest rate is 4.27%, which incorporates derivatives used to mitigate interest rate risk. See Note 10 to the Financial Statements regarding the maturity of long-term debt.

Debt of consolidated variable interest entities at December 31, 2016 included above comprised $113.1 million (2015 - $97.3 million), including the current portion but before deduction of unamortized debt issuance costs, of debt obligations of Charleston Center LLC, owner of Belmond Charleston Place in which Belmond has a 19.9% equity investment.

In August 2014, Charleston Center LLC entered into an $86.0 million loan secured on its real and personal property. This loan had a 2019 maturity and bore interest at a rate of LIBOR plus 2.12% per annum. In June 2016, Charleston Center LLC refinanced this loan with a $112.0 million new loan with the same 2019 maturity. The interest rate on the new loan is LIBOR plus 2.35% per annum, and the loan has no amortization and is non-recourse to Belmond. The additional proceeds were used to repay a 1984 development loan from a public agency and associated accrued interest.

Including debt of consolidated variable entities, approximately 25% of the outstanding principal was drawn in euros and the balance in U.S. dollars. At December 31, 2016, 52% of borrowings of Belmond were subject to floating interest rates.

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Belmond has contingently guaranteed debt obligations of certain of its joint ventures. The following table summarizes these commitments at December 31, 2016:

	Contingent guarantee	Duration
December 31, 2016	$ millions
PeruRail joint venture:
Concession performance	7.3	through May 2017
Peru hotel joint venture:
Debt obligations	17.7	through 2020
Total	25.0

Belmond has contingently guaranteed, through 2020, $17.7 million of debt obligations of the joint venture in Peru that operates four hotels. Belmond has also contingently guaranteed the Peru rail joint venture’s obligations relating to the performance of its governmental rail concessions, currently in the amount of $7.3 million, through May 2017. The contingent guarantees for each Peruvian joint venture may only be enforced in the event there is a change in control of the relevant joint venture, which would occur only if Belmond's ownership of the economic and voting interests in the joint venture falls below 50%, an event which has not occurred and is not expected to occur.

Contractual Obligations Summary

The following table summarizes Belmond’s (excluding joint ventures) material known contractual obligations in 2017 and later years as of December 31, 2016, excluding accounts payable and accrued liabilities: 

	2017	2018-2019	2020-2021	Thereafter	Total
Year ended December 31,	$ millions	$ millions	$ millions	$ millions	$ millions
Total long-term debt and obligations under capital leases, before deduction of discount on secured term loan and debt issuance costs	5.3	122.6	474.3	—	602.2
Operating leases	12.0	22.8	21.3	70.3	126.4
Capital commitments	7.8	—	—	—	7.8
Interest payments	25.7	47.6	23.7	—	97.0
Pension obligations	1.6	3.1	0.9	—	5.6
	52.4	196.1	520.2	70.3	839.0

Interest payments have been calculated using the amortization profile of the debt outstanding at December 31, 2016, taking into account the fixed rate paid under interest rate swaps and the prevailing floating rates of interest at the year end.

At December 31, 2016, Belmond has a provision of $0.3 million in respect of its uncertain tax positions in accordance with ASC 740, Income Taxes. Belmond is unable to estimate with any certainty when, or if, these liabilities will fall due. Accordingly, they are excluded from the contractual obligations table.

Off-Balance Sheet Arrangements

Belmond had no material off-balance sheet arrangements at December 31, 2016 other than those involving its equity investees reported in Notes 5, 6 and 24 to the Financial Statements, and those described in commitments and contingencies in Note 19.

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Critical Accounting Policies and Estimates

The preceding discussion and analysis of Belmond’s financial condition and results of operations is based on its consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires Belmond management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, Belmond management evaluates these estimates. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the result of which form the basis for judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially different results under different assumptions and conditions. Belmond management believes the following are Belmond’s most critical accounting policies and estimates.

Long-lived assets and goodwill

Belmond management periodically evaluates the recoverability of long-lived assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. These evaluations include analyses based on the undiscounted cash flows generated by the underlying assets, profitability information including estimated future operating results, trends or other determinants of fair value. The determination of fair value incorporates various assumptions and uncertainties, including future cash flows of the business and future growth rates, that Belmond believes are reasonable and supportable but are, however, by their nature, highly judgmental. If the value of the asset determined by these evaluations is less than its carrying amount, a loss, if any, is recognized for the difference between the fair value and the carrying value of the asset. Future adverse changes in market conditions or poor operating results of the related business may indicate an inability to recover the carrying value of the asset, thereby possibly requiring an impairment charge in the future.

Belmond recorded a non-cash property, plant and equipment impairment charge of $1.0 million in the year ended December 31, 2016. See Notes 2 and 7 to the Financial Statements for discussion of assumptions used in calculating these charges and sensitivity to changes in these estimates. There were no impairments to property, plant and equipment in the year ended December 31, 2015. Belmond recorded a non-cash property, plant and equipment impairment charge of $1.2 million in the year ended December 31, 2014.

Goodwill is evaluated at least annually for impairment, or more frequently if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value. Belmond’s goodwill impairment testing is performed in two steps, first, the determination of impairment based upon the fair value of each reporting unit as compared with its carrying value and, second, if there is an implied impairment, the measurement of the amount of the impairment loss is determined by comparing the implied fair value of goodwill with the carrying value of the goodwill. If the carrying value of the reporting unit’s goodwill exceeds its implied fair value, the goodwill is deemed to be impaired and is written down by the extent of the difference. The determination of impairment incorporates various assumptions and uncertainties that Belmond believes are reasonable and supportable considering all available evidence. The determination of future cash flows of the business is based on various assumptions including future ADR and occupancy levels, operating margins and economic and market conditions. Other key assumptions include terminal capitalization rates, future growth rates and the related discount rates, which are affected by assumptions including equity yield, loan to value ratios and amortization terms and interest rates. These assumptions and uncertainties are, by their very nature, highly judgmental. If the assumptions are not met, Belmond may be required to recognize additional goodwill impairment losses.

There were no impairments to goodwill in the year ended December 31, 2016. Belmond recorded goodwill impairment charges during the year ended December 31, 2015. See Notes 2 and 8 to the Financial Statements for discussion of estimates used in calculating these charges and sensitivity to changes in these estimates. There were no impairments to goodwill in the year ended December 31, 2014.

Other intangible assets with indefinite useful lives are also reviewed annually for impairment, or more frequently if events or changes in circumstances indicate that the asset may be impaired. Belmond uses internally developed discounted future cash flow models in determining the fair value of indefinite-lived intangible assets.

There were no impairments of other intangible assets in the year ended December 31, 2016, 2015 and 2014. See Note 9 to the Financial Statements for discussion of estimates used in calculating these charges and sensitivity to changes in these estimates.

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Depreciation

Real estate and other fixed assets are recorded at cost and are depreciated over their estimated useful lives by the straight-line method. The depreciation rates on freehold buildings are up to 60 years with a 10% residual value, on trains are up to 75 years, and on machinery and other remaining assets range from 3 to 25 years. Leasehold improvements are depreciated over the shorter of the estimated useful life or the respective lease terms including lease extensions that are reasonably assured. Belmond management periodically evaluates useful lives to ensure they remain appropriate and in line with estimated usage.

Income Taxes

Belmond’s income tax expense, deferred tax assets and liabilities and reserves for unrecognized tax benefits reflect management’s best assessment of estimated future taxes to be paid. Significant judgments and estimates are required in determining the consolidated income tax expense.

Deferred income taxes arise from temporary differences between the carrying value of assets and liabilities, and their tax basis. In evaluating Belmond’s ability to recover deferred tax assets within the jurisdiction from which they arise, Belmond considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, Belmond begins with historical results adjusted for the results of discontinued operations and changes in accounting policies and incorporates assumptions including the amount of future state, federal and foreign pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates Belmond is using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, Belmond considers three years of cumulative operating income or loss. Belmond maintains a valuation allowance to reduce its deferred tax assets to reflect the amount, based upon Belmond’s estimates that would more likely than not be realized. If Belmond’s future operations differed from those in the estimates, Belmond may need to increase or decrease the valuation allowance, which could affect its reported results.

The calculation of Belmond’s tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across its global operations. ASC 740 addresses accounting for uncertainty in income taxes recognized in the financial statements. ASC 740 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. This interpretation also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Belmond recognizes tax liabilities in accordance with ASC 740 and Belmond adjusts these liabilities when its 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 Belmond’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 they are determined.

Fair value measurements

Guidance on fair value measurements and disclosures (i) applies to certain assets and liabilities that are being measured and reported on a fair value basis, (ii) defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP, and expands disclosure about fair value measurements and (iii) enables the reader of the financial statements to assess the inputs to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values.

Guidance requires that assets and liabilities carried at fair value be classified and disclosed in one of three categories, namely quoted market prices in active markets for identical assets or liabilities (Level 1), observable market-based inputs or unobservable inputs that are corroborated by market data (Level 2), and unobservable inputs that are not corroborated by market data (Level 3).

Belmond reviews its fair value hierarchy classifications quarterly. Changes in significant observable valuation inputs identified during these reviews may trigger reclassification of fair value hierarchy levels of financial assets and liabilities. These reclassifications are reported as transfers in Level 3 at their fair values at the beginning of the period in which the change occurs and as transfers out at their fair values at the end of the period.

The fair value of Belmond’s derivative financial instruments is computed based on an income approach using appropriate valuation techniques including discounting future cash flows and other methods that are consistent with accepted economic methodologies for pricing financial instruments. Where credit value adjustments exceeded 20% of the fair value of the derivatives, Level 3 inputs are assumed to have a significant impact on the fair value of the derivatives in their entirety and the valuation has been included in the Level 3 category. See Note 20 to the Financial Statements.

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Belmond uses fair value measurements that are based on observable inputs wherever possible. Its valuation approaches are consistently applied and the assumptions used are reasonable in management's judgment.

Belmond uses third-party valuation specialists to estimate fair value of some of its financial assets and liabilities. These specialists are primarily used to estimate the fair value for debt and derivatives, as well as for asset valuation. Management performs various reviews and validation procedures prior to utilizing these fair values in Belmond's reporting process. Based on its due diligence discussions with these specialists, Belmond maintains a current understanding of the valuation processes and related assumptions and inputs that these specialists use in developing fair values. If Belmond determines that a fair value provided is outside established parameters, management will further examine the fair value including having follow-up discussions with the specialists. All of these procedures are executed before Belmond uses the valuations in preparing its financial statements.

Recent Accounting Pronouncements

As of December 31, 2016, Belmond had adopted all relevant accounting guidance, as reported in Note 2 to the Financial Statements. Accounting pronouncements to be adopted are also reported in Note 2 to the Financial Statements.

ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk

Belmond is exposed to market risk from changes in interest rates and foreign currency exchange rates. These exposures are monitored and managed as part of its overall risk management program, which recognizes the unpredictability of financial markets and seeks to mitigate material adverse effects on consolidated earnings and cash flow.  Belmond does not hold market rate sensitive financial instruments for trading purposes.

The market risk relating to interest rates arises mainly from the financing activities of Belmond. Earnings are affected by changes in interest rates on floating rate borrowings, principally based on U.S. dollar LIBOR and EURIBOR. Belmond management assesses market risk based on changes in interest rates using a sensitivity analysis.  If the rate paid by Belmond increased by 100 basis points with all other variables held constant and after taking into account the 1% floor on the corporate term loan, annual net finance costs of Belmond would have increased by approximately $2.4 million based on borrowings outstanding at December 31, 2016.

The market risk relating to foreign currencies arises from holding assets, buying, selling and financing in currencies other than the U.S. dollar, principally the euro, British pound, South African rand, Russian ruble and Brazilian real. Some non-U.S. subsidiaries of the Company borrow in local currencies, and Belmond may in the future enter into forward exchange contracts relating to purchases denominated in foreign currencies.

Ten of Belmond’s owned hotels in 2016 operated in European euro territories, two in Brazilian real, one in South African rand, one in British pounds sterling, three in Botswana pula, two in Mexican peso, one in Peruvian nuevo sol, one in Russian ruble and six in various Southeast Asian currencies. Revenue of the Venice Simplon-Orient-Express, Belmond British Pullman, Belmond Northern Belle and Belmond Royal Scotsman trains was primarily in British pounds sterling, but the operating costs of the Venice Simplon-Orient-Express were mainly denominated in euros. Revenue derived by Belmond Maroma Resort and Spa, Belmond La Samanna and Belmond Miraflores Park was recorded in U.S. dollars, but the majority of the hotels’ expenses were denominated in Mexican pesos, euros and Peruvian nuevo soles, respectively. Both revenue and the majority of expenses for Belmond Governor's Residence and Belmond La Résidence D'Angkor were recorded in U.S. dollars.

The currency of revenue and costs at Belmond's properties are generally the same. Belmond hedges the U.S. dollar value of its euro denominated net assets by drawing part of its debt in euros and designating that debt as a net investment hedge. In addition, a significant proportion of the guests at Belmond hotels located outside of the United States originate from the United States. When a foreign currency in which Belmond operates depreciates against the U.S. dollar, Belmond has some flexibility to increase prices in local currency, or vice versa. Management believes that when these factors are combined, Belmond does not face a material exposure to its net earnings from currency movements, although the reporting of Belmond’s revenue and costs translated into U.S. dollars can, from period to period, be materially affected.

Belmond management uses a sensitivity analysis to assess the potential impact on net earnings of changes in foreign currency financial instruments from hypothetical changes in the foreign currency exchange rates. The primary assumption used in this model is a hypothetical 10% weakening or strengthening of the foreign currencies against the U.S. dollar. However, because Belmond does not have at December 31, 2016 any significant financial instruments in a currency other than the functional currency of the operation concerned, apart from the euro-denominated indebtedness designated as a net investment hedge discussed in Note 21, there is no material potential impact on net earnings at December 31, 2016 as a result of hypothetical changes in the foreign currency exchange rates.

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ITEM 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

Belmond Ltd.

Hamilton, Bermuda

We have audited the accompanying consolidated balance sheets of Belmond Ltd. and subsidiaries (the “Company”) as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, cash flows, and total equity for each of the three years in the period ended December 31, 2016. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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, such consolidated financial statements present fairly, in all material respects, the financial position of Belmond Ltd. and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2016, based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2017 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ Deloitte LLP

London, England

February 28, 2017

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Belmond Ltd. and Subsidiaries

Consolidated Balance Sheet

	2016		2015
December 31,	$’000		$’000
Assets
Cash and cash equivalents	153,425		135,599
Restricted cash	1,830		2,568
Accounts receivable, net of allowances of $420 and $291	25,775		27,066
Due from unconsolidated companies	12,165		12,157
Prepaid expenses and other	12,262		13,310
Inventories	23,931		25,556
Total current assets	229,388		216,256
Property, plant and equipment, net of accumulated depreciation of $368,939 and $343,247	1,074,676		1,078,361
Investments in unconsolidated companies	79,327		71,724
Goodwill	113,343		113,996
Other intangible assets	13,877		13,852
Other assets	13,457		15,286
Total assets (1)	1,524,068		1,509,475
Liabilities and Equity
Accounts payable	16,366		15,826
Accrued liabilities	69,046		71,653
Deferred revenue	31,350		32,266
Current portion of long-term debt and obligations under capital leases	5,284		5,349
Total current liabilities	122,046		125,094
Long-term debt and obligations under capital leases	585,768		577,543
Liability for pension benefit	1,447		355
Other liabilities	5,366		20,470
Deferred income taxes	122,291		123,910
Liability for uncertain tax positions	318		3,678
Total liabilities (1)	837,236		851,050
Commitments and contingencies (Note 19)
Equity:
Shareholders’ equity:
Preferred shares $0.01 par value (30,000,000 shares authorized, issued Nil)	—		—
Class A common shares $0.01 par value (240,000,000 shares authorized):
Issued — 101,793,829 (2015 - 101,447,557)	1,018		1,015
Class B common shares $0.01 par value (120,000,000 shares authorized):
Issued — 18,044,478 (2015 - 18,044,478)	181		181
Additional paid-in capital	979,458		975,419
Retained earnings	52,751		16,172
Accumulated other comprehensive loss	(346,777	)	(334,542	)
Less: Reduction due to class B common shares owned by a subsidiary — 18,044,478 (2015 - 18,044,478)	(181	)	(181	)
Total shareholders’ equity	686,450		658,064
Non-controlling interests	382		361
Total equity	686,832		658,425
Total liabilities and equity	1,524,068		1,509,475

Belmond Ltd. and Subsidiaries

Consolidated Balance Sheets (continued)

(1) Included in Belmond Ltd.’s consolidated assets and liabilities are assets of consolidated variable interest entities (“consolidated VIEs”) that can only be used to settle obligations of the consolidated VIEs and liabilities of consolidated VIEs whose creditors have no recourse to Belmond Ltd. The Company’s only consolidated VIE at December 31, 2016 and December 31, 2015 is Charleston Center LLC. These assets and liabilities at December 31, 2016 and December 31, 2015 are as follows:

	December 31, 2016	December 31, 2015
	$’000	$’000
Assets
Cash and cash equivalents	2,233	2,569
Accounts receivable, net of allowances of $Nil and $Nil	3,066	2,712
Prepaid expenses and other	365	1,232
Inventories	1,296	1,231
Total current assets	6,960	7,744
Property, plant and equipment, net of accumulated depreciation of $35,902 and $30,260	201,861	201,342
Other assets	1,455	1,566
Total assets	210,276	210,652
Liabilities
Accounts payable	4,558	3,764
Accrued liabilities	3,099	2,910
Deferred revenue	1,714	2,551
Current portion of long-term debt and obligations under capital leases	242	229
Total current liabilities	9,613	9,454
Long-term debt and obligations under capital leases	111,968	96,392
Other liabilities	40	16,540
Total liabilities	121,621	122,386

See further description in Note 5, Variable interest entities.

See notes to consolidated financial statements.

62

Belmond Ltd. and Subsidiaries

Statements of Consolidated Operations

	2016		2015		2014
Year ended December 31,	$’000		$’000		$’000
Revenue (1)	549,824		551,385		585,715
Expenses:
Cost of services	240,097		243,609		262,603
Selling, general and administrative	198,590		206,197		219,584
Depreciation and amortization	52,396		50,513		52,004
Impairment of goodwill	—		9,796		—
Impairment of property, plant and equipment	1,007		—		1,211
Total operating costs and expenses	492,090		510,115		535,402
Gain on disposal of property, plant and equipment and equity method investments	938		20,275		4,128
Earnings from operations	58,672		61,545		54,441
Gain/(loss) on extinguishment of debt	1,200		—		(14,506	)
Other income	—		—		1,257
Interest income (2)	853		926		1,418
Interest expense	(29,155	)	(32,101	)	(36,767	)
Foreign currency, net	9,186		(5,016	)	2,262
Earnings before income taxes and earnings from unconsolidated companies, net of tax	40,756		25,354		8,105
Provision for income taxes	(16,368	)	(17,041	)	(15,542	)
Earnings/(losses) before earnings from unconsolidated companies, net of tax	24,388		8,313		(7,437	)
Earnings from unconsolidated companies, net of tax provision/(benefit) of $5,650, $1,466 and $(702)	11,013		9,075		9,484
Earnings from continuing operations	35,401		17,388		2,047
Net earnings/(losses) from discontinued operations, net of tax provision of $Nil, $Nil and $713	1,032		(1,534	)	(3,782	)
Net earnings/(losses)	36,433		15,854		(1,735	)
Net (earnings)/losses attributable to non-controlling interests	(109	)	411		(145	)
Net earnings/(losses) attributable to Belmond Ltd.	36,324		16,265		(1,880	)
(1)  Includes revenue from related parties of $15,458,000, $13,123,000 and $12,988,000, respectively
(2)  Includes interest income from related parties of $Nil, $301,000, and $904,000, respectively

See notes to consolidated financial statements.

63

Belmond Ltd. and Subsidiaries

Statements of Consolidated Operations (continued)

	2016	2015		2014
Year ended December 31,	$	$		$
Basic earnings per share
Net earnings/(losses) from continuing operations	0.35	0.17		0.02
Net earnings/(losses) from discontinued operations	0.01	(0.01	)	(0.04	)
Basic net earnings/(losses) per share attributable to Belmond Ltd.	0.36	0.16		(0.02	)
Diluted earnings per share
Net earnings/(losses) from continuing operations	0.34	0.17		0.02
Net earnings/(losses) from discontinued operations	0.01	(0.01	)	(0.04	)
Diluted net earnings/(losses) per share attributable to Belmond Ltd.	0.35	0.16		(0.02	)

See notes to consolidated financial statements.

64

Belmond Ltd. and Subsidiaries

Statements of Consolidated Comprehensive Income

	2016		2015		2014
Year ended December 31,	$’000		$’000		$’000
Net earnings/(losses)	36,433		15,854		(1,735	)
Other comprehensive income/(losses), net of tax:
Foreign currency translation adjustments, net of tax (benefit)/provision of $(809), $Nil and $(462)	(10,848	)	(88,457	)	(152,155	)
Change in fair value of derivatives, net of tax provision/(benefit) of $222, $(352) and $1,503	867		(522	)	(188	)
Change in pension liability, net of tax (benefit)/provision of $(530),$147 and $(528)	(2,119	)	580		(1,926	)
Total other comprehensive losses, net of tax	(12,100	)	(88,399	)	(154,269	)
Total comprehensive income/(losses)	24,333		(72,545	)	(156,004	)
Comprehensive (income)/losses attributable to non-controlling interests	(244	)	688		1,021
Comprehensive income/(losses) attributable to Belmond Ltd.	24,089		(71,857	)	(154,983	)

See notes to consolidated financial statements.

65

Belmond Ltd. and Subsidiaries

Statements of Consolidated Cash Flows

	2016		2015		2014
Year ended December 31,	$'000		$'000		$'000
Cash flows from operating activities:
Net earnings/(losses)	36,433		15,854		(1,735	)
Less: Net earnings/(losses) from discontinued operations, net of tax	1,032		(1,534	)	(3,782	)
Net earnings from continuing operations	35,401		17,388		2,047
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	52,396		50,513		52,004
Impairment of goodwill	—		9,796		—
Impairment of property, plant and equipment	1,007		—		1,211
Gain on disposal of property, plant and equipment and equity method investments	(938	)	(20,275	)	(4,128	)
(Gain)/loss on extinguishment of debt	(1,200	)	—		14,506
Earnings from unconsolidated companies, net of tax	(11,013	)	(9,075	)	(9,484	)
Amortization of debt issuance costs and discount on secured term loan	3,044		2,903		3,921
Share-based compensation	6,272		6,707		7,928
Change in provisions for uncertain tax positions	(3,350	)	279		496
Benefit from deferred income tax	(305	)	(124	)	(11,246	)
Other non-cash movements	567		(1,076	)	3,950
Effect of exchange rates on net earnings/(losses)	(12,258	)	896		(4,518	)
Change in assets and liabilities, net of effects from acquisitions:
Accounts receivable	1,961		(536	)	1,593
Due from unconsolidated companies	(788	)	1,167		(2,784	)
Prepaid expense and other	668		(725	)	(2,500	)
Inventories	(504	)	1,962		2,251
Escrow and prepaid customer deposits	379		(1,284	)	(615	)
Accounts payable	877		(5,703	)	3,178
Accrued liabilities	245		10,127		(2,059	)
Deferred revenue	(1,434	)	5,877		227
Other liabilities	(14,121	)	—		—
Other, net	148		(3,008	)	48
Other cash movements:
Dividends from equity method investees	4,449		3,649		3,725
Proceeds from insurance settlements	—		—		887
Payment of key money	—		—		(3,000	)
Payment of swap termination costs	—		—		(3,985	)
Net cash provided by operating activities from continuing operations	61,503		69,458		53,653
Net cash provided by/(used in) operating activities from discontinued operations	38		(1,534	)	(2,317	)
Net cash provided by operating activities	61,541		67,924		51,336

See notes to consolidated financial statements.

66

Belmond Ltd. and Subsidiaries

Statements of Consolidated Cash Flows (continued)

	2016		2015		2014
Year ended December 31,	$'000		$'000		$'000
Cash flows from investing activities:
Capital expenditure to acquire property, plant and equipment	(55,104	)	(56,395	)	(63,454	)
Capital expenditure to acquire intangible assets	—		(714	)	(269	)
Investments in unconsolidated companies	—		(4,061	)	(4,082	)
Increase in restricted cash	(6	)	—		(526	)
Release of restricted cash	—		519		11,324
Change in deferred revenue for asset sale deposits	—		(500	)	(3,500	)
Proceeds from insurance settlements	—		—		297
Proceeds from sale of property, plant and equipment and equity method investments	2,746		43,742		37,842
Net cash used in investing activities from continuing operations	(52,364	)	(17,409	)	(22,368	)
Net cash provided by investing activities from discontinued operations	—		—		—
Net cash used in investing activities	(52,364	)	(17,409	)	(22,368	)
Cash flows from financing activities:
Payments on working capital facilities	—		—		(133	)
Repurchase of shares	(1,992	)	(37,565	)	—
Exercised stock options and vested share awards	17		35		19
Dividend to non-controlling interest	(15	)	(20	)	—
Issuance of long-term debt	26,000		—		572,046
Debt issuance costs	(465	)	(856	)	(17,798	)
Principal payments under long-term debt	(13,904	)	(5,432	)	(565,051	)
Net cash provided by/(used in) financing activities from continuing operations	9,641		(43,838	)	(10,917	)
Net cash provided by financing activities from discontinued operations	—		—		—
Net cash provided by/(used in) financing activities	9,641		(43,838	)	(10,917	)
Effect of exchange rate changes on cash and cash equivalents	(992	)	(6,196	)	(6,486	)
Net increase in cash and cash equivalents	17,826		481		11,565
Cash and cash equivalents at beginning of period (includes $Nil, $Nil and $394 of cash presented within assets held for sale)	135,599		135,118		123,553
Cash and cash equivalents at end of period (includes $Nil, $Nil, $Nil of cash presented within assets held for sale)	153,425		135,599		135,118

See notes to consolidated financial statements.

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Belmond Ltd. and Subsidiaries

Statements of Consolidated Total Equity

	Preferred shares at par value $’000	Class A common shares at par value $’000		Class B common shares at par value $’000	Additional paid-in capital $’000		Retained earnings $’000		Accumulated other comprehensive loss $’000		Class B common shares held by a subsidiary $’000		Non- controlling interests $’000		Total $’000
Balance, January 1, 2014	—	1,036		181	992,860		7,643		(93,317	)	(181	)	2,423		910,645
Share-based compensation	—	—		—	7,928		—		—		—		—		7,928
Exercised stock options and vested share awards	—	4		—	15		—		—		—		—		19
Dividend to non-controlling interest	—	—		—	—		—		—		—		(327	)	(327	)
Comprehensive loss:
Net losses attributable to common shares	—	—		—	—		(1,880	)	—		—		145		(1,735	)
Other comprehensive loss	—	—		—	—		—		(153,103	)	—		(1,166	)	(154,269	)
Balance, December 31, 2014	—	1,040		181	1,000,803		5,763		(246,420	)	(181	)	1,075		762,261
Share-based compensation	—	—		—	6,707		—		—		—		—		6,707
Exercised stock options and vested share awards	—	8		—	27		—		—		—		—		35
Repurchase of shares	—	(33	)	—	(32,118	)	(5,856	)	—		—		—		(38,007	)
Dividend to non-controlling interest	—	—		—	—		—		—		—		(26	)	(26	)
Comprehensive loss:
Net earnings attributable to common shares	—	—		—	—		16,265		—		—		(411	)	15,854
Other comprehensive loss	—	—		—	—		—		(88,122	)	—		(277	)	(88,399	)
Balance at December 31, 2015	—	1,015		181	975,419		16,172		(334,542	)	(181	)	361		658,425
Share-based compensation	—	—		—	6,272		—		—		—		—		6,272
Exercised stock options and vested share awards	—	5		—	12		—		—		—		—		17
Repurchase of shares	—	(2	)	—	(2,245	)	255		—		—		—		(1,992	)
Dividend to non-controlling interest	—	—		—	—		—		—		—		(223	)	(223	)
Comprehensive loss:
Net earnings attributable to common shares	—	—		—	—		36,324		—		—		109		36,433
Other comprehensive loss	—	—		—	—		—		(12,235	)	—		135		(12,100	)
Balance at December 31, 2016	—	1,018		181	979,458		52,751		(346,777	)	(181	)	382		686,832

See notes to consolidated financial statements.

68

Belmond Ltd. and Subsidiaries

Notes to Consolidated Financial Statements

1.    Basis of financial statement presentation

Business

In this report Belmond Ltd. is referred to as the “Company”, and the Company and its consolidated subsidiaries are referred to collectively as “Belmond”. On June 30, 2014, the Company changed its name from Orient-Express Hotels Ltd. to Belmond Ltd. following approval by shareholders at the 2014 annual general meeting held on that date. On July 28, 2014, the Company changed the ticker symbol of its class A common shares listed on the New York Stock Exchange from OEH to BEL.

At December 31, 2016, Belmond owned, invested in or managed 34 deluxe hotels and resort properties operating in the United States, Mexico, Caribbean, Europe, Southern Africa, South America, and Southeast Asia, one stand-alone restaurant in New York, seven tourist trains in Europe, Southeast Asia and Peru, two river cruise businesses in Myanmar (Burma) and one canal boat business in France.

Basis of presentation

The accompanying consolidated 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 and all its majority-owned subsidiaries and variable interest entities in which Belmond is the primary beneficiary.  The consolidated financial statements have been prepared using the historical basis in the assets and liabilities and the historical results of operations directly attributable to Belmond, and all intercompany accounts and transactions between the Company and its subsidiaries have been eliminated. For entities where the Company does not have a controlling financial interest, the investments in those entities are accounted for using the equity or cost method, as appropriate.

Reclassifications

Discontinued operations and assets and liabilities held for sale were reclassified in the consolidated financial statements for all periods presented. See Note 4 for a summary of the results of discontinued operations and assets and liabilities held for sale.

Belmond revised the order of the presentation of these segments in the year ended December 31, 2016 and included a new sub-total to show management fees earned by the Company. In addition, Belmond reclassified certain expenses associated with the Company’s development team from the Part-owned/managed hotels segment to central costs. Prior periods have been re-presented to reflect the current period presentation. There has not been a material impact on the consolidated financial statements. See Note 23.

2.    Summary of significant accounting policies

“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.

Cash and cash equivalents

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

Restricted cash

Restricted cash is the carrying amount of cash and cash equivalents which are bindingly restricted as to withdrawal or usage. These include deposits held as compensating balances against borrowing arrangements or under contracts entered into with others, but exclude compensating balance arrangements that do not legally restrict the use of cash amounts shown on the balance sheet.

Concentration of credit risk

Due to the nature of the leisure industry, concentration of credit risk with respect to trade receivables is limited. Belmond’s customer base consists of numerous customers across different geographic areas.

69

Inventories

Inventories include food, beverages, certain operating stocks and retail goods. Inventories are valued at the lower of cost or market value under the weighted average method.

Assets held for sale and discontinued operations

Assets held for sale represent assets of an operating entity that are to be disposed of, together as a group in a single transaction, and liabilities directly associated with the assets that will be transferred in the transaction. Belmond considers properties to be assets held for sale when management approves and commits to a formal plan actively to market a property for sale and Belmond has a signed sales contract and received a significant non-refundable deposit. Upon designation as an asset held for sale, Belmond records the carrying value of each property at the lower of its carrying value which includes allocable segment goodwill or its estimated fair value, less estimated costs to sell, and Belmond stops recording depreciation expense. Where there is no significant ongoing involvement, the gain from the sale is recorded at the date of sale.

The results of operations of an entity that either has been disposed of or is classified as held for sale are reported in discontinued operations where the operations and cash flows of the entity will be eliminated from continuing operations as a result of the disposal transaction and Belmond will not have any significant continuing involvement in the operations of the entity after the disposal transaction.

Property, plant and equipment

Property, plant and equipment is 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:

Description	Useful lives
Buildings	Up to 60 years and 10% residual value
Trains	Up to 75 years
River cruise ship and canal boats	25 years
Furniture, fixtures and equipment	3 to 25 years
Equipment under capital lease and leasehold improvements	Lesser of initial lease term or economic life

Land and certain art and antiques are not depreciated.

Impairment of long-lived assets

Belmond 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. Belmond evaluates the carrying value of long-lived assets based on its plans, at the time, for those 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 Belmond’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.

70

Investments

Investments include equity interests in and advances to unconsolidated companies and are accounted for under the equity method of accounting when Belmond has a 20% to 50% ownership interest or exercises significant influence over the investee. Under the equity method, the investment in the equity method investee or joint venture is initially recognized in the consolidated balance sheet at cost and adjusted thereafter to recognize Belmond’s share of net earnings or losses and other comprehensive income or loss of the investee. Belmond continues to report losses up to its investment carrying amount, including any additional financial support made or committed to by Belmond. Belmond’s share of earnings or losses is included in the determination of net earnings, and net investment in investees and joint ventures is included within investments in unconsolidated companies in the consolidated balance sheets.

Investments accounted for using the equity method are considered impaired when a loss in the value of the equity method investment is other than temporary. Evidence of a loss in value might include, but would not necessarily be limited to, absence of an ability to recover the carrying amount of the investment or inability of the investee to sustain its earnings capacity that would justify the carrying amount of the investment. If Belmond determines that the decline in value of its investment is other than temporary, the carrying amount of the investment is written down to its fair value through earnings.

Goodwill

Goodwill is not amortized but is tested for impairment at least annually or more frequently if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value. Belmond's annual goodwill impairment testing date is October 1. To test goodwill for impairment, Belmond first compares the carrying value of each reporting unit to its fair value to determine if an impairment is indicated. The fair value of reporting units is determined using internally developed discounted future cash flow models, which incorporate third party appraisals and industry/market data (to the extent available). If an impairment is indicated, Belmond compares the implied fair value of the reporting unit's goodwill to its carrying amount. An impairment loss is measured as the excess of the carrying value of a reporting unit's goodwill over its implied fair value.

When determining the fair value of a reporting unit, Belmond is required to make significant judgments that Belmond believes are reasonable and supportable considering all available internal and external evidence at the time. However, these estimates and assumptions are, by their nature, highly judgmental. Fair value determinations are sensitive to changes in the underlying assumptions and factors including those relating to estimating future operating cash flows to be generated from the reporting unit which are dependent upon internal forecasts and projections developed as part of Belmond’s routine, long-term planning process, available industry/market data (to the extent available), Belmond’s strategic plans, estimates of long-term growth rates taking into account Belmond’s assessment of the current economic environment and the timing and degree of any economic recovery, estimation of the useful life over which the cash flows will occur, and market participant assumptions. The assumptions with the most significant impact to the fair value of the reporting unit are those related to future operating cash flows which are forecast for a five-year period from management’s budget and planning process, the terminal value which is included for the period beyond five years from the balance sheet date based on the estimated cash flow in the fifth year and a terminal growth rate ranging from 1.2% to 4.9% (December 31, 2015 - 2.7% to 7.4%), and pre-tax discount rates which for the year ended December 31, 2016 range from 7.5% to 16.7% (December 31, 2015 - 8.3% to 16.9%).

Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and ultimately impact the estimated fair values of Belmond’s  reporting units may include such items as (i) a prolonged weakness in the general economic conditions in which the reporting units operate and therefore negatively impacting occupancy and room rates, (ii) an economic recovery that significantly differs from Belmond’s assumptions in timing and/or degree, (iii) volatility in the equity and debt markets which could result in a higher discount rate, (iv) shifts or changes in future travel patterns from Belmond’s significant demographic markets that have not been anticipated, (v) changes in competitive supply, (vi) political and security instability in countries where Belmond operates and (vii) deterioration of local economies due to the uncertainty over currencies or currency unions and other factors which could lead to changes in projected cash flows of Belmond’s properties as customers reduce their discretionary spending. If the assumptions used in the impairment analysis are not met or materially change, Belmond may be required to recognize additional goodwill impairment losses which may be material to the financial statements.

Other intangible assets

Trade names have an indefinite life and therefore are not amortized, but are assessed for impairment annually or when events indicate that impairment may have occurred. Other intangible assets with definite useful lives are tested for impairment if events or changes in circumstances indicate that the asset may be impaired. Belmond uses internally developed discounted future cash flow models in determining the fair value of indefinite-lived intangible assets. 

71

Favorable lease intangible assets are amortized over the terms of the leases, which are between 19 and 60 years. Internet sites are amortized over a period of five to ten years.

Variable interest entities

Belmond analyzes its variable interests, including loans, guarantees and equity investments, to determine if an entity is a variable interest entity (“VIE”). In that assessment, Belmond's analysis includes both quantitative and qualitative considerations. Belmond bases its quantitative analysis on the forecast cash flows of the entity, and its qualitative analysis on a review of the design of the entity, organizational structure including decision-making ability, and relevant financial agreements. Belmond also uses its quantitative and qualitative analysis to determine if Belmond is the primary beneficiary and would therefore be required to consolidate the VIE.

Fair value measurements

Assets and liabilities carried at fair value are required to be classified and disclosed in one of three categories: Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date, Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, and Level 3 — unobservable inputs for the asset or liability. Belmond reviews its fair value hierarchy classifications quarterly. Changes in significant observable valuation inputs identified during these reviews may trigger reclassification of fair value hierarchy levels of financial assets and liabilities. These reclassifications are reported as transfers at their fair values at the beginning of the period in which the change occurs and as transfers out at their fair values at the end of the period.

Derivatives are recorded in the consolidated balance sheets at fair value. The fair value of Belmond’s derivative financial instruments is computed based on an income approach using appropriate valuation techniques including discounting future cash flows and other methods that are consistent with accepted economic methodologies for pricing financial instruments. The valuation process for the derivatives uses observable market data provided by third-party sources. Interest rate swaps are valued by using yield curves derived from observable interest rates to project future swap cash flows and then these cash flows are discounted back to present values. Interest rate caps are valued using a model that projects the probability of various levels of interest rates occurring in the future using observable volatilities.

In the determination of fair value of derivative instruments, a credit valuation adjustment is applied to Belmond’s derivative exposures to take into account the risk of the counterparty defaulting with the derivative in an asset position and, when the derivative is in a liability position, the risk that Belmond may default. The credit valuation adjustment is calculated by determining the total expected exposure of the derivatives (incorporating both the current and potential future exposure) and then applying each counterparty’s credit spread to the applicable exposure. For interest rate swaps, Belmond’s own credit spread is applied to the counterparty’s exposure to Belmond and the counterparties credit spread is applied to Belmond’s exposure to the counterparty, and then the net credit valuation adjustment is reflected in the determination of the fair value of the derivative instrument. The credit spreads used as inputs in the fair value calculations represent implied credit default swaps obtained from a third-party credit data provider. Some of the inputs into the credit valuation adjustment are not observable and, therefore, they are considered to be Level 3 inputs. Where the credit valuation adjustment exceeds 20% of the fair value of the derivatives, Level 3 inputs are assumed to have a significant impact on the fair value of the derivatives in their entirety and the derivative is classified as Level 3.

Derivative financial instruments

Derivative instruments are recorded on the consolidated balance sheets at fair value. The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in other comprehensive income/(loss) and is subsequently reclassified into earnings in the period that the hedged forecast transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. If a derivative instrument is not designated as a hedge for accounting purposes, the fluctuations in the fair value of the derivative are recorded in earnings.

Belmond management formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategies for undertaking various hedge transactions. Belmond links all hedges that are designated as fair value hedges to specific assets or liabilities on the consolidated balance sheets or to specific firm commitments. Belmond links all hedges that are designated as cash flow hedges to forecasted transactions or to floating rate liabilities on the balance sheets. Belmond management also assesses, both at the inception of the hedge and on an ongoing basis, whether the derivatives that are designated in hedging relationships are highly effective in offsetting changes in fair values or cash flows of hedged items.  Belmond discontinues hedge accounting prospectively when the derivative is not highly effective as a hedge, the underlying hedged transaction is no longer probable, or the hedging instrument expires, is terminated, or exercised.

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Belmond is exposed to interest rate risk on its floating rate debt and management uses derivatives to manage the impact of interest rate changes on earnings and cash flows. Belmond’s objective in using interest rate derivatives is to add certainty and stability to its interest expense. To accomplish this objective, Belmond primarily uses interest rate swaps as part of its interest rate risk management strategy. These swaps effectively convert the floating rate interest payments on a portion of the outstanding debt into fixed payments.

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recorded in other comprehensive income/(loss) within foreign currency translation adjustment. The gain or loss relating to the ineffective portion will be recognized immediately in earnings within foreign currency, net. Gains and losses deferred in accumulated other comprehensive income/(loss) are recognized in earnings upon disposal of the foreign operation. Belmond links all hedges that are designated as net investment hedges to specifically identified net investments in foreign subsidiaries.

Belmond has net assets denominated in a variety of currencies. It hedges the U.S. dollar value of euro net assets by using net investment hedges.

Pensions

Belmond’s primary defined benefit pension plan is accounted for using actuarial valuations. Net funded status is recognized on the consolidated balance sheets and any unrecognized prior service costs or actuarial gains and losses are reported as a component of other comprehensive income/(loss) in shareholders’ equity.

In determining the expected long-term rate of return on assets, management has reviewed anticipated future long-term performance of individual asset classes and the appropriate asset allocation strategy given the anticipated requirements of the plan to determine the average rate of earnings expected on the funds invested. The projected returns are based on broad equity and bond indices, including fixed interest rate gilts (United Kingdom Government issued securities) of long-term duration since the plan operates in the U.K.

Management continues to monitor and evaluate the level of pension contributions based on various factors that include investment performance, actuarial valuation and tax deductibility.

Share-based compensation

Equity-settled transactions

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which equity instruments are granted and is recognized as an expense over the vesting period, which ends on the date on which the relevant employees become fully entitled to the award.

Estimates of the grant date fair value of share options and the fair value of deferred shares and restricted shares without performance criteria on the grant date were made using the Black-Scholes option pricing model, and estimates of the grant date fair value of deferred shares with performance criteria and market conditions were made using the Monte Carlo valuation model.

For awards with market conditions, the conditions are incorporated into the fair value measurement and the compensation value is not adjusted if the conditions are not met. For awards with performance conditions, compensation expense is recognized when it becomes probable that the performance criteria specified in the awards will be achieved and, accordingly, the compensation value is adjusted following the changes in the estimates of shares likely to vest based on the performance criteria.

Expected volatilities are based on historical volatility of the Company’s class A common share price and other factors. The risk-free rate for periods within the expected life is based on the U.S. Treasury yield curve in effect at the time of grant. The expected life represents the period that share-based awards are expected to be outstanding and was determined using historical experience, giving consideration to the contractual terms of the share-based awards and vesting schedules.

At each balance sheet date before the share-based award vests, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management’s best estimate of the achievement or otherwise of non-market conditions and the number of equity instruments that will ultimately vest or, in the case of an instrument subject to a market condition, be treated as vesting as described above. The movement in cumulative expense since the previous balance sheet date is recognized in the consolidated statements of operations, with a corresponding entry in equity.

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Previously recognized compensation cost is not reversed if an employee share option for which the requisite service has been rendered expires unexercised (or unconverted). If stock options are forfeited, then the compensation expense accrued is reversed.  Prior to December 31, 2016, Belmond did not estimate a future forfeitures rate and did not incorporate it into the grant value on issue of the awards on the grounds of materiality. As of December 31, 2016 Belmond adopted new guidance and made an accounting policy election to allow the recognition of the effects of forfeitures in compensation cost when they occur.

Estimates

Belmond bases its estimates on historical experience and also on assumptions that Belmond 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 and the disclosure of contingent 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, fair value of derivative instruments, estimates for determining the fair value of goodwill, long-lived and other intangible asset impairment, share-based compensation, depreciation and amortization, carrying value of assets including intangible assets, employee benefits, taxes, and contingencies. Actual results may differ from those estimates.

Revenue recognition

Hotel and restaurant revenue is recognized when the rooms are occupied and the services are performed. Train and cruise revenue is recognized upon commencement of the journey. Revenue under management contracts is recognized based upon on an agreed base fee and additional revenue is recognized on the attainment of certain financial results, primarily revenue and operating earnings, in each contract as defined.

Deferred revenue consisting of deposits paid in advance is recognized as revenue when the services are performed for hotels and restaurants and upon commencement of train and cruise journeys. 

Marketing costs

Marketing costs are expensed as incurred, and are reported in selling, general and administrative expenses. Marketing costs include costs of advertising and other marketing activities. These costs were $38,361,000 in 2016 (2015 - $40,381,000; 2014 - $42,251,000).

Interest expense

Capitalized interest during the construction of qualifying assets is capitalized and included in the cost of the asset. Direct and incremental costs incurred in obtaining loans or in connection with the issuance of long-term debt are deferred and amortized to interest expense over the term of the related debt.

Foreign currency

The functional currency for each of Belmond’s operating subsidiaries is the applicable local currency, except for properties in French West Indies, Peru, Cambodia, Myanmar and one property in Mexico, where the functional currency is U.S. dollars.

For foreign subsidiaries with a functional currency other than the U.S. dollar, income and expenses are translated into U.S. dollars, the reporting currency of Belmond, at the average rates of exchange prevailing during the year. The assets and liabilities are translated into U.S. dollars at the rates of exchange on the balance sheet date and the related translation adjustments are included in other comprehensive income/(loss). Translation adjustments arising from intercompany financing of a subsidiary that is considered to be long-term in nature are also recorded in other comprehensive income/(loss) as they are considered part of the net investment in the subsidiary.

Transactions in currencies other than an entity’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.

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Prior to 2014, Belmond’s Brazilian operations used the U.S. dollar as their functional currency. Effective January 1, 2014, Belmond changed the functional currency to the Brazilian real. Belmond believes that the growth in the Brazilian operations’ real-denominated revenues and expenses indicated a change in the economic facts and circumstances that justified the change in the functional currency. A foreign currency translation adjustment loss of $49,356,000 arising on the remeasurement of non-monetary assets and liabilities of Belmond’s Brazilian operations, of which the majority related to property, plant and equipment, is included in other comprehensive losses for the year ended December 31, 2014.

Income taxes

Belmond 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 Belmond’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 in the period enacted rates change. All deferred tax assets and liabilities are classified as non-current and are netted according to tax-paying component and jurisdiction.

In evaluating Belmond’s ability to recover deferred tax assets within the jurisdiction in which they arise, 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 ASC 740 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 Belmond’s estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which the new information becomes available, actual tax liabilities are determined or the statute of limitations has expired. Belmond recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the consolidated statements of operations. Liabilities for uncertain tax benefits are included in the consolidated balance sheets and classified as current or non-current liabilities depending on the expected timing of payment.

Earnings from unconsolidated companies

Earnings from unconsolidated companies include Belmond’s share of the net earnings of its equity investments.

Earnings per share

Basic earnings per share are based upon net earnings/(losses) attributable to Belmond divided by the weighted average number of class A and B common shares outstanding for the period. Diluted earnings/(losses) per share reflect the increase in shares using the treasury stock method to reflect the impact of an equivalent number of shares as if share options were exercised and share-based awards were converted into common shares. Potentially dilutive shares are excluded when the effect would be to increase diluted earnings per share or reduce diluted losses per share. 

Accounting pronouncements adopted during the year

In March 2016, the FASB issued new guidance which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance is effective for annual and interim periods beginning after December 15, 2016, with early adoption permitted. Some elements of the new guidance are applicable on a prospective basis, some elements on a retrospective basis and some using a modified retrospective transition method. Belmond has early adopted this guidance as of December 31, 2016. The adoption of this guidance did not have a material effect on Belmond’s consolidated financial statements.

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Accounting pronouncements to be adopted

In May 2014, the FASB issued new guidance which is intended to improve the comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets. The guidance supersedes existing revenue recognition guidance and requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the new guidance. In March 2016, the FASB issued additional guidance which amends the principal-versus-agent implementation guidance and illustrations in the original accounting pronouncement. In May 2016, the FASB issued an update that clarified guidance in certain narrow aspects of the topic. The guidance was originally effective for annual and interim periods beginning after December 15, 2016, however in July 2015 the FASB confirmed that the effective date would be deferred by one year, to annual and interim periods beginning after December 15, 2017. Early adoption is permitted only for periods beginning after December 15, 2016. Belmond is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.

In February 2016, the FASB issued its new standard on accounting for leases, which introduces a lessee model that brings most leases on the balance sheet. A distinction between finance leases and operating leases is retained, with the result that the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous lease guidance. The guidance is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Belmond is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.

In August 2016, the FASB issued new guidance which clarifies the classification of certain cash receipts and payments in the statement of cash flows. The guidance is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted. The new guidance will be applied on a retrospective basis where applicable. Belmond is currently evaluating the impact, if any, of the adoption of this guidance on its consolidated financial statements.

In October 2016, the FASB issued new guidance which is intended to simplify the tax consequences of certain types of intra-entity asset transfers. The guidance is effective for annual periods ending after December 15, 2017, and interim periods thereafter, with early adoption permitted. The new guidance will be applied on a modified retrospective basis. Belmond is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.

In October 2016, the FASB issued new guidance which amends the existing guidance on related parties that are under common control. The new standard requires that a single decision maker consider indirect interests held by related parties under common control on a proportionate basis in a manner consistent with its evaluation of indirect interests held through other related parties. The guidance is effective for annual periods beginning on or after December 15, 2016, including interim and annual periods, with early adoption permitted. Belmond is currently assessing what impact the adoption of this guidance will have on its consolidated financial statements.

In November 2016, the FASB issued new guidance which clarifies the classification and presentation of restricted cash in the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods therein, with early adoption permitted. Belmond is currently assessing what impact the adoption of this guidance will have on its consolidated financial statements.

In January 2017, the FASB issued new guidance to simplify the accounting for goodwill impairment by eliminating step 2 from the goodwill impairment test. A goodwill impairment will now be measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance is effective for annual and interim impairment tests for periods beginning after December 15, 2019, with early adoption permitted for any impairment tests performed after January 1, 2017. The new guidance will be applied on a prospective basis. Belmond is currently assessing what impact the adoption of this guidance will have on its consolidated financial statements.

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3.    Earnings per share

The calculation of basic and diluted earnings per share including a reconciliation of the numerator and denominator is as follows:

Year ended December 31,	2016		2015		2014
Numerator ($'000)
Net earnings/(losses) from continuing operations	35,401		17,388		2,047
Net earnings/(losses) from discontinued operations	1,032		(1,534	)	(3,782	)
Net losses/(earnings) attributable to non-controlling interests	(109	)	411		(145	)
Net earnings/(losses) attributable to Belmond Ltd.	36,324		16,265		(1,880	)
Denominator (shares '000)
Basic weighted average shares outstanding	101,586		103,163		103,837
Effect of dilution	1,369		1,193		2,291
Diluted weighted average shares outstanding	102,955		104,356		106,128
	$		$		$
Basic earnings per share
Net earnings/(losses) from continuing operations	0.348		0.169		0.020
Net earnings/(losses) from discontinued operations	0.010		(0.015	)	(0.036	)
Net losses/(earnings) attributable to non-controlling interests	(0.001	)	0.004		(0.001	)
Net earnings/(losses) attributable to Belmond Ltd.	0.357		0.158		(0.017	)
Diluted earnings per share
Net earnings/(losses) from continuing operations	0.344		0.167		0.019
Net earnings/(losses) from discontinued operations	0.010		(0.015	)	(0.036	)
Net losses/(earnings) attributable to non-controlling interests	(0.001	)	0.004		(0.001	)
Net earnings/(losses) attributable to Belmond Ltd.	0.353		0.156		(0.018	)

The total number of share options and share-based awards excluded from computing diluted earnings per share were as follows: 

Year ended December 31,	2016	2015	2014
Share options	1,679,817	1,441,972	810,500
Total	1,679,817	1,441,972	810,500

The number of share options and share-based awards unexercised at December 31, 2016 was 3,904,614 (2015 - 3,950,794; 2014 - 5,157,292).

4.    Assets held for sale and discontinued operations

At December 31, 2016 and 2015, no assets and liabilities were classified as held for sale.

For the years ended December 31, 2016, 2015 and 2014, the results of operations of Ubud Hanging Gardens, Bali, Indonesia and the Porto Cupecoy development on the Dutch side of St Martin, French West Indies have been presented as discontinued operations.

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During the year ended December 31, 2016, a sale was completed on the property, plant and equipment relating to the trains and carriages that were formerly operated as the Great South Pacific Express in Queensland, Australia. During the year ended December 31, 2014, a sale was completed on one condominium relating to Porto Cupecoy on the Dutch side of St Martin. Also, during the year ended December 31, 2014, Inn at Perry Cabin by Belmond, St Michaels, Maryland was sold. Due to Belmond's continuing involvement in managing the hotel, its results are presented within continuing operations.

(a)    Properties sold: Inn at Perry Cabin by Belmond and Great South Pacific Express

On the April 19, 2016, Belmond completed the sale of the property, plant and equipment relating to the trains and carriages that were formerly operated as the Great South Pacific Express in Queensland, Australia for consideration of $2,362,400 to the Company’s PeruRail joint venture. The carriages were sold at their carrying value and no gain or loss arose on disposal.

On March 21, 2014, Belmond completed the sale of the property and operations of Inn at Perry Cabin by Belmond for consideration of $39,700,000, of which $25,680,000 was paid in cash, $11,020,000 was settled directly with the lender to repay the debt facility secured by the property. In addition, $3,000,000 was a key money contribution from Belmond to the buyer to be used for agreed capital enhancements. Belmond will continue to operate the hotel for the new owner under a management agreement with a ten-year term that permits termination on the fifth anniversary of the agreement. The disposal resulted in a gain of $6,704,000, of which $3,704,000 was recognized on completion on March 21, 2014 and $3,000,000 was deferred to be recognized over the initial period of the management agreement. The gain on sale of $3,704,000 recognized on March 21, 2014 and the subsequent release of the deferred gain is reported within gain on disposal of property, plant and equipment and equity method investments in the statements of consolidated operations.

The following is a summary of net assets sold and the gain recorded on sale for Inn at Perry Cabin by Belmond:

Year ended December 31,	2014
	Inn at Perry Cabin by Belmond
	March 21, 2014
	$'000
Property, plant & equipment	32,293
Net working capital deficit	(820	)
Net assets	31,473
Consideration:
Cash	25,680
Reduction in debt facility on sale of hotel	11,020
Key money retained by buyer	3,000
Less: Working capital adjustment	(1,130	)
Less: Costs to sell	(393	)
	38,177
Gain on sale	6,704

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(b)    Results of discontinued operations

Belmond had been operating the hotel Ubud Hanging Gardens under a long-term lease arrangement with a third-party owner. The existing lease arrangement continues to 2030. Following the owner's unannounced dispossession of Belmond from the hotel in November 2013, however, Belmond was unable to continue to operate the hotel. Belmond believed that the owner's actions were unlawful and constituted a wrongful dispossession and has pursued its legal remedies under the lease. See Note 19. As Belmond is unable to operate Ubud Hanging Gardens for the foreseeable future, the hotel has been presented as a discontinued operation for all periods shown. The assets and liabilities of the hotel have not been classified as held for sale, as the hotel has not been disposed of through a sale transaction.

The Porto Cupecoy development was sold in January 2013, with the final unit disposed of in September 2014. Revenue and residual costs relating to the sale of Porto Cupecoy are presented within discontinued operations for all periods shown.

Summarized results of the properties classified as discontinued operations for the years ended December 31, 2016, 2015 and 2014 are as follows: 

	Year ended December 31, 2016
	Ubud Hanging Gardens	Porto Cupecoy	Total
	$'000	$'000	$'000
Revenue	—	—	—
Earnings before tax, gain on sale and impairment	69	963	1,032
Earnings before tax	69	963	1,032
Net earnings from discontinued operations	69	963	1,032

	Year ended December 31, 2015
	Ubud Hanging Gardens		Porto Cupecoy		Total
	$'000		$'000		$'000
Revenue	—		—		—
Losses before tax, gain on sales and impairment	(636	)	(898	)	(1,534	)
Losses before tax	(636	)	(898	)	(1,534	)
Net losses from discontinued operations	(636	)	(898	)	(1,534	)

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	Year ended December 31, 2014
	Ubud Hanging Gardens		Porto Cupecoy		Total
	$'000		$'000		$'000
Revenue	—		600		600
Losses before tax, gain on sale and impairment	(1,486	)	(1,583	)	(3,069	)
Losses before tax	(1,486	)	(1,583	)	(3,069	)
Tax provision	(713	)	—		(713	)
Net losses from discontinued operations	(2,199	)	(1,583	)	(3,782	)

The results of discontinued operations for the year ended December 31, 2016 included earning of $69,000 due to the partial release of legal fee accruals in relation to Ubud Hanging Gardens, where Belmond is pursuing legal remedies following its dispossession by the owner in November 2013. In addition, the results of discontinued operations for the year ended December 31, 2016 included earnings of $963,000 at Porto Cupecoy due to the release of a provision in respect of tax claims that Belmond believes it is now effectively discharged from. See Note 19.

The results of discontinued operations for the years ended December 31, 2015 and 2014 comprised legal fees of $636,000 and $1,486,000 , respectively, in relation to Ubud Hanging Gardens.

5.    Variable interest entities

(a)    VIEs of which Belmond is the primary beneficiary

Belmond holds a 19.9% equity investment in Charleston Center LLC, owner of Belmond Charleston Place, Charleston, South Carolina. Belmond has also made a number of loans to the hotel. Belmond concluded that Charleston Center LLC is a VIE because the total equity at risk is insufficient for the entity to fund its operations without additional subordinated financial support, the majority of which has been provided by Belmond. Belmond is the primary beneficiary of this VIE because it is expected to absorb a majority of the VIE’s expected losses and residual gains through the subordinated financial support it has provided, and has the power to direct the activities that impact the VIE’s performance, based on the current organizational structure.

Assets of Charleston Center LLC that can only be used to settle obligations of the consolidated VIEs and liabilities of Charleston Center LLC whose creditors have no recourse to Belmond Ltd are presented as a footnote to the consolidated balance sheets. The third-party debt of Charleston Center LLC is secured by its net assets and is non-recourse to its members, including Belmond. The hotel's separate assets are not available to pay the debts of Belmond and the hotel's separate liabilities do not constitute obligations of Belmond. The assets of Charleston Center LLC that can only be used to settle obligations of Charleston Center LLC totaled $210,276,000 at December 31, 2016 (December 31, 2015 - $210,652,000) and exclude goodwill of $40,395,000 (December 31, 2015 - $40,395,000). The liabilities of Charleston Center LLC for which creditors do not have recourse to the general credit of Belmond totaled $121,621,000 (December 31, 2015 - $122,386,000).

All deferred taxes attributable to Belmond’s investment in the LLC arise at the investor level and are therefore not included in the footnote to the consolidated balance sheets.

(b)    VIEs of which Belmond is not the primary beneficiary

Belmond holds a 25% equity investment in Eastern and Oriental Express Ltd., which operates the Eastern & Oriental Express luxury tourist train in Southeast Asia. Belmond concluded that the Eastern & Oriental Express joint venture is a variable interest entity because the total equity at risk is insufficient for it to fund its operations without additional subordinated financial support. The joint venture does not have a primary beneficiary because no one party has the power to direct the activities that most significantly impact the economic performance of the entity. The joint venture is accounted for under the equity method of accounting and included in earnings/(losses) before income taxes and earnings from unconsolidated companies in the statements of consolidated operations.

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The carrying amounts and maximum exposure to loss as a result of Belmond's involvement with its Eastern & Oriental Express joint venture are as follows:

	Carrying amounts		Maximum exposure
	2016	2015	2016	2015
December 31,	$’000	$’000	$’000	$’000
Investment	2,818	2,972	2,818	2,972
Due from unconsolidated company	4,771	4,872	4,771	4,872
Guarantees	—	—	—	—
Contingent guarantees	—	—	—	—
Total	7,589	7,844	7,589	7,844

(c) Former VIEs

Belmond holds a 50% equity investment in its rail joint venture in Peru which operates the infrastructure, rolling stock, stations and services on a portion of the state-owned railways in Peru. Belmond previously concluded that the PeruRail joint venture was a variable interest entity because the total equity at risk was insufficient for it to fund its operations without additional subordinated financial support. The joint venture is under joint control as all significant budgetary and capital decisions require a majority of approval of the joint venture's board of directors, on which board Belmond holds two of four seats with the other two seats representing unaffiliated local Peruvian investors.

Previously, Belmond had guaranteed certain debt obligations of the joint venture. The guaranteed debt was repaid with non-guaranteed debt in the year ended December 31, 2015. Belmond concluded that this constituted a change in the design of the entity and reconsidered its initial determination of the entity’s VIE status. Belmond concluded that the joint venture now qualifies for the scope exceptions contained within U.S. GAAP to be excluded from consideration under the VIE guidance.

The joint venture is accounted for under the equity method of accounting and included in earnings/(losses) before income taxes and earnings from unconsolidated companies in the statements of consolidated operations.

6.    Investments in unconsolidated companies

Investments in unconsolidated companies represent equity interests of 50% or less and in which Belmond exerts significant influence, but does not have effective control of these unconsolidated companies and, therefore, accounts for these investments using the equity method. As at December 31, 2016, these investments include the 50% ownership in rail and hotel joint venture operations in Peru, the 25% ownership in Eastern and Oriental Express Ltd, and the Buzios land joint venture which is 50% owned and further described below.

In June 2007, a joint venture in which Belmond holds a 50% equity interest acquired real estate in Buzios, a beach resort area in Brazil, for a cash consideration of $5,000,000. Belmond planned to build a hotel and villas on the acquired land and to purchase the remaining share of the joint venture company when the building permits were obtained from the local authorities. In February 2009, the Municipality of Buzios commenced a process for the expropriation of the land in exchange for a payment of fair compensation to the joint venture. In April 2011, the State of Rio de Janeiro took over the expropriation process as part of a broader State plan to develop a large environmental park. Under applicable law, the State had five years to carry out the expropriation in exchange for fair value, which it has failed to do by the April 18, 2016 deadline. As a result, the land returns unencumbered to the joint venture, although it can be subject to expropriation again after a period of one year. The Company and its joint venture partner are assessing their options, including negotiation with or litigation against the State to seek a permanent resolution of the status of the land, but in any case, the Company expects to recover its investment in the project.

On May 21, 2015, Belmond sold its 50% ownership in Hotel Ritz by Belmond, Madrid, Spain. Belmond and its joint venture partner sold the shares in the entity that owns the hotel for gross proceeds of €130,000,000 ($144,529,000 at date of sale). As a condition of the sale, Belmond’s management contract with Hotel Ritz by Belmond was terminated, resulting in the receipt of a termination fee of $2,292,000.

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The following table shows the net proceeds to Belmond and a summary of net assets sold, resulting in a gain of $19,676,000 that is reported within gain on disposal of property, plant and equipment and equity method investments in the statements of consolidated operations:

	Hotel Ritz by Belmond
	May 21, 2015
	$'000
Receivables due from unconsolidated companies	29,679
Investments in unconsolidated companies	—
Net assets sold	29,679
Transfer of foreign currency translation gain	(5,613	)
	24,066
Consideration:
Cash	42,197
Less: Costs to sell	(747	)
Plus: Management contract termination fee	2,292
	43,742
Gain on sale	19,676

Summarized financial data for Belmond’s unconsolidated companies are as follows:

	2016	2015
December 31,	$’000	$’000
Current assets	96,247	59,372
Property, plant and equipment, net of accumulated depreciation	295,662	207,469
Other non-current assets	29,442	30,643
Non-current assets	325,104	238,112
Total assets	421,351	297,484
Current liabilities, including $21,021 and $19,171 current portion of third-party debt	89,785	86,092
Long-term debt	153,876	48,681
Other non-current liabilities	27,545	26,540
Non-current liabilities	181,421	75,221
Total shareholders’ equity	150,145	136,171
Total liabilities and shareholders’ equity	421,351	297,484

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	2016	2015	2014
Year ended December 31,	$’000	$’000	$’000
Revenue	191,551	160,614	172,793
Gross profit1	135,000	104,708	105,333
Net earnings2	21,720	17,723	19,622

¹Gross profit is defined as revenues less cost of services of the unconsolidated companies.

²There were no discontinued operations, extraordinary items or cumulative effects of a change in an accounting principle in the unconsolidated companies.

Included in unconsolidated companies are Belmond’s hotel and rail joint ventures in Peru, under which Belmond and the other 50% participant must contribute equally additional equity needed for the businesses. If the other participant does not meet this obligation, Belmond has the right to dilute the other participant and obtain a majority equity interest in the affected joint venture company. Belmond also has rights to purchase the other participant’s interests, which rights are exercisable in limited circumstances such as the other participant’s bankruptcy.

There are contingent guarantees to unconsolidated companies which are not recognized in the consolidated financial statements. The contingent guarantees for each Peruvian joint venture may only be enforced in the event there is a change in control of the relevant joint venture, which would occur only if Belmond’s ownership of the economic and voting interests in the joint venture falls below 50%, an event which has not occurred and is not expected to occur. As at December 31, 2016, Belmond does not expect that it will be required to fund these guarantees relating to these joint venture companies.

Belmond has contingently guaranteed, through 2020, $17,734,000 of debt obligations of the joint venture in Peru that operates four hotels and has contingently guaranteed the Peru rail joint venture’s obligations relating to the performance of its governmental rail concessions, currently in the amount of $7,261,000, through May 2017.

At December 31, 2014, Belmond guaranteed $4,124,000 of the debt obligations of the rail joint venture in Peru. The guaranteed debt was repaid by the joint venture in the year ended December 31, 2015. See Note 5.

7.    Property, plant and equipment

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

	2016		2015
December 31,	$’000		$’000
Land and buildings	1,010,362		994,382
Machinery and equipment	179,537		182,510
Furniture, fixtures and equipment	235,098		225,943
River cruise ship and canal boats	18,618		18,773
	1,443,615		1,421,608
Less: Accumulated depreciation	(368,939	)	(343,247	)
Total property, plant and equipment, net of accumulated depreciation	1,074,676		1,078,361

The depreciation charge on property, plant and equipment of continuing operations for the year ended December 31, 2016 was $51,835,000 (2015 - $49,982,000; 2014 - $51,629,000).

The table above includes the property, plant and equipment of Charleston Center LLC, a consolidated VIE, of $201,861,000 (2015 - $201,342,000). See Note 5.

There was no capitalized interest in the year ended December 31, 2016 (2015 - $Nil; 2014 - $Nil).

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During the year ended December 31, 2016, Belmond considered whether the decline in performance of Belmond Orcaella, a cruise ship in Myanmar under long-term charter, caused by increased competition in Myanmar indicated that the carrying amount of the business' fixed assets may not be recoverable. Belmond concluded that an impairment trigger existed and an impairment test was required. The carrying value of assets was written down to fair value based on management’s best estimate of the recoverable value. The impairment charge of $1,007,000 is included within impairment of property, plant and equipment in the statements of consolidated operations.

During the year ended December 31, 2016, Belmond considered whether the decline in performance of Belmond Northern Belle caused by a reduction in passenger numbers sourced mainly from regional markets in the U.K. indicated that the carrying amount of Belmond Northern Belle's fixed assets may not be recoverable. Under the first step of the fixed assets impairment test, the sum of the undiscounted cash flows expected to result from the operations of Belmond Northern Belle was in excess of its carrying value. Belmond Northern Belle had a property, plant and equipment balance of $4,332,000 at December 31, 2016. The impairment test remains sensitive to changes in assumptions; factors that could reasonably be expected to potentially have an adverse effect on the sum of the undiscounted cash flows of the reporting unit include the future operating projections of the train, particularly passenger numbers and ticket prices, and any deterioration in the U.K. regional economy. Any failure to meet these assumptions may result in an impairment charge that would write down the carrying value of assets to fair value in future periods.

There were no impairments of property, plant and equipment in the year ended December 31, 2015.

In the year ended December 31, 2014, Belmond identified and recorded a non-cash property, plant and equipment impairment charge of $1,211,000 relating to the write-down to fair value of train carriages of Belmond's former Great South Pacific Express train, which were held in Australia and not in service. The impairment charge was included within impairment of property, plant and equipment in the statements of consolidated operations.

8.    Goodwill

The changes in the carrying amount of goodwill for the years ended December 31, 2016 and 2015 are as follows: 

	Beginning balance at January 1, 2016							Ending balance at December 31, 2016
	Gross goodwill amount	Accumulated impairment		Net goodwill amount	Impairment	Foreign currency translation adjustment		Gross goodwill amount	Accumulated impairment		Net goodwill amount
Year ended December 31, 2016	$'000	$'000		$'000	$'000	$'000		$'000	$'000		$'000
Owned hotels:
Europe	64,263	(14,202	)	50,061	—	196		64,459	(14,202	)	50,257
North America	66,101	(16,110	)	49,991	—	—		66,101	(16,110	)	49,991
Rest of world	19,975	(13,149	)	6,826	—	606		20,581	(13,149	)	7,432
Owned trains and cruises	7,780	(662	)	7,118	—	(1,455	)	6,325	(662	)	5,663
Total	158,119	(44,123	)	113,996	—	(653	)	157,466	(44,123	)	113,343

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	Beginning balance at January 1, 2015								Ending balance at December 31, 2015
	Gross goodwill amount	Accumulated impairment		Net goodwill amount	Impairment		Foreign currency translation adjustment		Gross goodwill amount	Accumulated impairment		Net goodwill amount
Year ended December 31, 2015	$'000	$'000		$'000	$'000		$'000		$'000	$'000		$'000
Owned hotels:
Europe	71,292	(10,104	)	61,188	(4,098	)	(7,029	)	64,263	(14,202	)	50,061
North America	66,101	(16,110	)	49,991	—		—		66,101	(16,110	)	49,991
Rest of world	21,705	(8,113	)	13,592	(5,036	)	(1,730	)	19,975	(13,149	)	6,826
Owned trains and cruises	7,873	—		7,873	(662	)	(93	)	7,780	(662	)	7,118
Total	166,971	(34,327	)	132,644	(9,796	)	(8,852	)	158,119	(44,123	)	113,996

Belmond's annual impairment test date is October 1, when all reporting units with goodwill balances are reviewed for impairment. The first step of the impairment test compares the carrying value of each reporting unit to its fair value to determine if an impairment is indicated. The fair value of a reporting unit is determined using internally developed discounted future cash flow models, which include input from external valuation experts to provide discount and long term growth rates. If an impairment is indicated, the second step of the impairment test compares the implied fair value of the reporting unit's goodwill to its carrying amount. An impairment loss is measured as the excess of the carrying value of a reporting unit's goodwill over its implied fair value.

There were no impairments to goodwill in the year ended December 31, 2016.

In the three months ended December 31, 2016, Belmond considered whether the declining financial performance of '21' Club caused by stock market volatility and neighboring construction works indicated that it was more likely than not that the fair value of '21' Club was less than its carrying value. Under the first step of the goodwill impairment test, the fair value of '21' Club was approximately 3% in excess of its carrying value. '21' Club had a goodwill balance of $9,596,000 at December 31, 2016. Factors that could reasonably be expected to potentially have an adverse effect on the fair value of the reporting unit include the future operating projections of the restaurant, volatility in debt or equity markets that could result in changes to the discount rate, political instability in the region or changes in future travel patterns.

Also, in the three months ended December 31, 2016, Belmond considered whether the difficult economic condition in Russia indicated that it was more likely than not that the fair value of Belmond Grand Hotel Europe was less than its carrying value. Under the first step of the goodwill impairment test, the fair value of Belmond Grand Hotel Europe was approximately 21% in excess of its carrying value. Belmond Grand Hotel Europe had a goodwill balance of $9,199,000 at December 31, 2016. Factors that could reasonably be expected to potentially have an adverse effect on the fair value of the reporting unit include the future operating projections of the hotel, volatility in debt or equity markets that could result in changes to the discount rate, economic sanctions and the timing and extent of recovery in the Russian economy.

During the year ended December 31, 2015, the following non-cash goodwill impairment charges were identified and recorded:

• An impairment charge of $4,098,000 at Belmond Grand Hotel Europe. Belmond determined that this impairment was triggered by the deterioration of the Russian economic environment which commenced in the second half of 2014 and failed to improve significantly in 2015 under economic sanctions. The continued sanctions and lack of economic recovery led management to reconsider its estimates for future profitability of the business, including future growth in ADR and occupancy rates and the related discount rates.

• An impairment charge of $3,581,000 at Belmond Jimbaran Puri. Belmond determined that this impairment was triggered by declining performance over a number of periods, caused in part by the stronger U.S. dollar and increased relative expense of the region for European travelers in particular. Further weakness in performance that continued into the peak season in the second quarter led management to reconsider its estimates for future profitability of the business, including future growth in ADR and occupancy rates and the related discount rates.

• An impairment charge of $1,455,000 at Belmond La Résidence Phou Vao. Belmond determined that this impairment was triggered by the declining popularity of the destination, increased relative expense of the region for European travelers as well as increased competition from smaller independent operators. After a weak winter period, the improvement in

85

performance in 2015 was not as strong as expected, leading management to reconsider its estimates for future profitability of the business, including future growth in ADR and occupancy rates and the related discount rates.

• An impairment charge of $662,000 at Belmond Northern Belle. Belmond determined that this impairment was triggered by declining performance caused by a reduction in passenger numbers sourced mainly from regional markets in the U.K. Continued softness in passenger numbers over the key summer period led management to reconsider its estimates for future profitability of the business, including future growth in ticket prices and passenger numbers and the related discount rates.

There were no impairments to goodwill in the year ended December 31, 2014.

9.    Other intangible assets

Other intangible assets consist of the following as of December 31, 2016 and 2015:

	Favorable lease assets		Internet sites		Trade names	Total
	$'000		$'000		$'000	$'000
Carrying amount:
Balance at January 1, 2015	8,586		1,888		7,100	17,574
Additions	714		—		—	714
Foreign currency translation adjustment	(807	)	(97	)	—	(904	)
Balance at December 31, 2015	8,493		1,791		7,100	17,384
Additions	—		177		—	177
Foreign currency translation adjustment	8		(310	)	479	177
Balance at December 31, 2016	8,501		1,658		7,579	17,738
Accumulated amortization:
Balance at January 1, 2015	2,486		1,130			3,616
Charge for the year	341		190			531
Foreign currency translation adjustment	(554	)	(60	)		(614	)
Balance at December 31, 2015	2,273		1,260			3,533
Charge for the year	373		188			561
Foreign currency translation adjustment	(10	)	(223	)		(233	)
Balance at December 31, 2016	2,636		1,225			3,861
Net book value:
December 31, 2014	6,100		758		7,100	13,958
December 31, 2015	6,220		531		7,100	13,851
December 31, 2016	5,865		433		7,579	13,877

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Favorable lease intangible assets are amortized over the terms of the leases, which are between 19 and 60 years. Internet sites are amortized over a period of five to ten years. Trade names have an indefinite life and therefore are not amortized, but are assessed for impairment annually or when events indicate that impairment may have occurred.

In the year ended December 31, 2015, favorable lease asset additions of $714,000 were recorded and relate to a concession obtained by Belmond Villa Sant'Andrea in Sicily, Italy to operate a portion of beach adjacent to the hotel.

In the year ended December 31, 2016, 2015 and 2014, no impairments of other intangible assets were recognized.

The trade name at Belmond Grand Hotel Europe was tested for impairment as of October 1, 2016. Under the first step of the impairment test, the fair value of the Belmond Grand Hotel Europe trade name was approximately 42% in excess of its carrying value. Belmond Grand Hotel Europe had a trade name balance of $7,579,000 at December 31, 2016. See Note 8 for discussion of factors that could reasonably be expected to potentially have an adverse effect on the fair value of the trade name.

Amortization expense from continuing operations for the year ended December 31, 2016 was $561,000 (2015 - $531,000; 2014 - $375,000). Estimated amortization expense for each of the years ending December 31, 2017 to December 31, 2021 is approximately $561,000.

10.    Debt and obligations under capital lease

(a)    Long-term debt and obligations under capital lease

Long-term debt and obligations under capital lease consists of the following:

	2016	2015
December 31,	$’000	$’000
Loans from banks and other parties collateralized by tangible and intangible personal property and real estate with a maturity of 2 to 5 years (2015 - four to 13 years), with a weighted average interest rate of 4.27% (2015 - 4.28%)	602,083	596,428
Obligations under capital lease	19	59
Total long-term debt and obligations under capital leases	602,102	596,487
Less: Current portion	5,284	5,349
Less: Discount on secured term loan	1,515	1,894
Less: Debt issuance costs	9,535	11,701
Non-current portion of long-term debt and obligations under capital lease	585,768	577,543

Belmond is financed with a $488,985,000 secured term loan and a $105,000,000 revolving credit facility.

The term loan has two tranches, a U.S. dollar tranche ($335,513,000 currently outstanding) and a euro-denominated tranche (€145,875,000 currently outstanding, equivalent to $153,472,000 as at December 31, 2016). The dollar tranche bears interest at a rate of LIBOR plus 3% per annum, and the euro tranche originally had an interest rate of EURIBOR plus 3.25% per annum. The euro-denominated tranche was repriced in June 2015 to a rate of EURIBOR plus 3% per annum. Both tranches are subject to a 1% interest rate floor. The term loan matures in 2021 and the annual mandatory amortization is 1% of the principal amount.

The revolving credit facility matures in March 2019 and bears interest at a rate of LIBOR plus 2.75% per annum, with a commitment fee of 0.4% paid on the undrawn amount.

The term loan and revolving credit facility are secured by pledges of shares in certain Company subsidiaries and by security interests in tangible and intangible personal property. There are no mortgages over real estate.

In August 2014, Charleston Center LLC entered into an $86,000,000 loan secured on its real and personal property. This loan had a 2019 maturity and an interest rate of LIBOR plus 2.12% per annum. In June 2016, Charleston Center LLC refinanced this loan with a $112,000,000 new loan with the same 2019 maturity. The interest rate on the new loan is LIBOR plus 2.35% per annum,

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and the loan has no amortization and is non-recourse to Belmond. The additional proceeds were used to repay a 1984 development loan from a municipal agency in the principal amount of $10,000,000 and accrued interest of $16,819,000. In connection with the early repayment of the loan, Belmond negotiated a discount that resulted in a net gain reported in the statements of consolidated operations of $1,200,000 upon the extinguishment of the debt, including the payment of a tax indemnity to our partners of $2,800,000 in respect of their allocation of income from the discount arising on the cancellation of indebtedness.

The following is a summary of the aggregate maturities of long-term debt, including obligations under capital lease, at December 31, 2016:

Year ended December 31,	$’000
2017	5,284
2018	5,286
2019	117,298
2020	5,312
2021	468,922
2022 and thereafter	—
Total long-term debt and obligations under capital lease	602,102

The Company has guaranteed $488,985,000 of the long-term debt of its subsidiary companies as at December 31, 2016 (2015 -$499,100,000).

The tables above include the debt of Charleston Center LLC of $113,098,000 at December 31, 2016 (2015 - $97,328,000). The debt is non-recourse to Belmond and includes $112,000,000 which was refinanced in June 2016.

Debt issuance costs related to the above outstanding long-term debt were $9,535,000 at December 31, 2016 (2015 - $11,701,000), including $888,000 at December 31, 2016 (2015 - $707,000) related to the debt of Charleston Center LLC, a consolidated VIE, and are amortized to interest expense over the term of the corresponding long-term debt.

(b)Revolving credit and working capital facilities

Belmond had approximately $105,525,000 of revolving credit and working capital facilities at December 31, 2016 (2015 - $106,082,000) of which $105,525,000 was available (2015 - $106,082,000).

11.    Other liabilities

The major balances in other liabilities are as follows:

	2016	2015
December 31,	$’000	$’000
Interest rate swaps (see Note 21)	1,054	1,733
Long-term accrued interest on subordinated debt at Charleston Center LLC (see Note 10)	—	16,540
Deferred gain on sale of Inn at Perry Cabin by Belmond	1,350	1,950
Deferred lease incentive	162	247
Tax indemnity provision on extinguishment of debt (see Note 10)	2,800	—
Total other liabilities	5,366	20,470

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12.    Pensions

From January 1, 2003, a number of non-U.S. Belmond employees participated in a funded defined benefit pension plan in the United Kingdom called the Belmond (UK) Ltd. 2003 Pension Scheme. On May 31, 2006, the plan was closed for future benefit accruals.

The significant weighted-average assumptions used to determine net periodic costs of the plan during the year were as follows:

	2016	2015	2014
Year ended December 31,	%	%	%
Discount rate	3.85	3.70	4.50
Expected long-term rate of return on plan assets	4.90	4.10	4.80

The significant weighted-average assumptions used to determine benefit obligations of the plan at year end were as follows:

	2016	2015
December 31,	%	%
Discount rate	2.70	3.85

The discount rate effectively represents the average rate of return on high quality corporate bonds at the end of the year in the country in which the benefit obligations arise.

The expected rate of return on the pension fund assets, net of expenses has been determined by considering the actual asset classes held by the plan at December 31, 2016 and the yields available on U.K. government bonds at that date.

For equities and corporate bonds, management has assumed that long-term returns will exceed those expected on U.K. government bonds by a risk premium. This is based on historical equity and bond returns over the long term. As these returns are long-term expected returns, the total returns on equities and corporate bonds only vary in line with the U.K. government bond yields and are not further adjusted for current market trends.

The expected returns on annuities are set equal to the end of year discount rate as the value of annuities is tied to that rate.

The fair value of Belmond’s pension plan assets at December 31, 2016 and 2015 by asset category is as follows:

	Total	Level 1	Level 2	Level 3
December 31, 2016	$’000	$’000	$’000	$’000
Cash	2,840	2,840	—	—
Equity securities:
U.K. managed funds	4,461	4,461	—	—
Overseas managed funds	5,667	5,667	—	—
Fixed income securities:
U.K. government bonds	2,774	2,774	—	—
Corporate bonds	2,004	2,004	—	—
Other types of investments:
Quoted hedge funds	4,330	4,330	—	—
Annuities	1,942	—	—	1,942
	24,018	22,076	—	1,942

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	Total	Level 1	Level 2	Level 3
December 31, 2015	$’000	$’000	$’000	$’000
Cash	1,101	1,101	—	—
Equity securities:
U.K. managed funds	5,509	5,509	—	—
Overseas managed funds	4,999	4,999	—	—
Fixed income securities:
U.K. government bonds	860	860	—	—
Corporate bonds	5,847	5,847	—	—
Other types of investments:
Quoted hedge funds	3,860	3,860	—	—
Annuities	2,026	—	—	2,026
	24,202	22,176	—	2,026

The value of the annuities is the present value at the measurement date of the expected future cashflows under the annuity policy in which significant unobservable inputs were used. Therefore, we have classified the annuities as Level 3 assets.

All other assets are valued using quoted market prices in active markets or other observable inputs.

Reconciliations of fair value measurements using significant unobservable inputs (Level 3) at December 31, 2016 and 2015 are as follows:

	Annuities
Year ended December 31, 2016	$’000
Beginning balance at January 1, 2016	2,026
Foreign exchange	(342	)
Actual return on plan assets:
Assets still held at the reporting date	321
Purchases, sales and settlements, net	(63	)
Ending balance at December 31, 2016	1,942

	Annuities
Year ended December 31, 2015	$’000
Beginning balance at January 1, 2015	2,186
Foreign exchange	(112	)
Actual return on plan assets:
Assets still held at the reporting date	25
Purchases, sales and settlements, net	(73	)
Ending balance at December 31, 2015	2,026

The allocation of the assets was in compliance with the target allocation set out in the plan investment policy, the principal objectives of which are to deliver returns above those of government and corporate bonds and to minimize the cost of providing pension benefits.

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The changes in the benefit obligation, the plan assets and the funded status for the plan were as follows:

	2016		2015		2014
Year ended December 31,	$’000		$’000		$’000
Change in benefit obligation:
Benefit obligation at beginning of year	24,556		27,353		24,768
Interest cost	861		984		1,092
Actuarial loss/(gain)	5,259		(702	)	3,680
Benefits paid	(529	)	(1,723	)	(468	)
Foreign currency translation	(4,682	)	(1,356	)	(1,719	)
Benefit obligation at end of year	25,465		24,556		27,353
Change in plan assets:
Fair value of plan assets at beginning of year	24,202		24,968		23,162
Actual return on plan assets	3,116		309		1,821
Employer contributions	1,730		1,946		2,025
Benefits paid	(529	)	(1,723	)	(468	)
Foreign currency translation	(4,501	)	(1,298	)	(1,572	)
Fair value of plan assets at end of year	24,018		24,202		24,968
Funded status at end of year	(1,447	)	(354	)	(2,385	)
Net actuarial loss/(gain) recognized in other comprehensive loss	2,649		(727	)	2,449

Amounts recognized in the consolidated balance sheets consist of the following:

	2016	2015
December 31,	$’000	$’000
Non-current liabilities	1,447	354

Amounts recognized in accumulated other comprehensive loss gross of tax consist of the following:

	2016		2015
December 31,	$’000		$’000
Net loss	(12,583	)	(9,934	)
Prior service cost	—		—
Net transitional obligation	—		—
Total amount recognized in accumulated other comprehensive loss	(12,583	)	(9,934	)

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The following table details certain information with respect to Belmond’s U.K. defined benefit pension plan:

	2016	2015
Year ended December 31,	$’000	$’000
Projected benefit obligation	25,465	24,556
Accumulated benefit obligation	25,465	24,556
Fair value of plan assets	24,018	24,202

Components of net periodic benefit cost are as follows:

	2016		2015		2014
Year ended December 31,	$’000		$’000		$’000
Service cost	—		—		—
Interest cost on projected benefit obligation	861		984		1,092
Expected return on assets	(1,121	)	(1,034	)	(1,139	)
Net amortization and deferrals	615		750		550
Net periodic benefit cost	355		700		503

A U.K. subsidiary of Belmond is obligated to the plan’s trust to pay £1,272,000 (equivalent to $1,565,000 at December 31, 2016) annually until the plan is fully funded, which based on its December 2012 actuarial assessment (prepared using assumptions which differ in some respects to those used to value the liability for these financial statements), is projected to occur in 2017. Once the plan is fully funded, the U.K. subsidiary will remain obligated to restore the plan to a fully funded balance should its position deteriorate. In May 2014, Belmond Ltd. guaranteed the payment obligations of the U.K. subsidiary through 2023, subject to a cap of £8,200,000 (equivalent to $10,086,000 at December 31, 2016), which reduces commensurately with every payment made to the plan since December 31, 2012.

The following benefit payments, which reflect assumed future service, are expected to be paid:

Year ended December 31,	$’000
2017	531
2018	440
2019	609
2020	488
2021	627
Next five years	4,253

The estimated net loss amortized from accumulated other comprehensive income/(loss) into net periodic pension cost in the next fiscal year is $744,000.

Certain employees of Belmond were members of defined contribution pension plans.  Total contributions to the plans were as follows:

	2016	2015	2014
Year ended December 31,	$’000	$’000	$’000
Employers’ contributions	2,052	2,199	2,527

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13.    Income taxes

The Company is incorporated in Bermuda and migrated its tax residence to the United Kingdom on April 1, 2015. Belmond’s effective tax rate is significantly affected by its mix of income and loss in various jurisdictions as there is significant variation in the income tax rate imposed and also by the effect of losses in jurisdictions where the tax benefit is not recognized. In the year ended December 31, 2016, the additional tax attributable to taxation rates in excess of the territory where Belmond Ltd. is tax resident had the impact of increasing the provision for income taxes by $9,509,000 (2015: $12,948,000).

Accordingly, the income tax provision is attributable to income tax charges incurred by subsidiaries operating in jurisdictions that impose an income tax, and is impacted by the effect of valuation allowances and uncertain tax positions. The income tax provision is also affected by certain items that may occur in any given year, but are not consistent from year to year.

The provision for income taxes consists of the following:

			Provision for income taxes
Year ended December 31, 2016	Pre-tax (loss)/ income $’000		Current $’000		Deferred $’000		Total $’000
UK	(6,702	)	949		(444	)	505
Bermuda	160		—		—		—
United States	2,681		(1,510	)	(1,978	)	(3,488	)
Brazil	15,303		5,498		(121	)	5,377
Italy	19,971		4,468		1,998		6,466
Peru	13,965		4,261		1,625		5,886
Rest of the world	(4,622	)	3,007		(1,385	)	1,622
	40,756		16,673		(305	)	16,368

			Provision for income taxes
Year ended December 31, 2015	Pre-tax (loss)/ income $’000		Current $’000	Deferred $’000		Total $’000
UK	(18,965	)	1,585	(2,262	)	(677	)
Bermuda	(4,315	)	—	—		—
United States	1,439		1,310	1,698		3,008
Brazil	10,380		2,768	760		3,528
Italy	17,351		4,006	(824	)	3,182
Peru	12,078		3,154	(677	)	2,477
Rest of the world	7,386		4,341	1,182		5,523
	25,354		17,164	(123	)	17,041

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			Provision for income taxes
Year ended December 31, 2014	Pre-tax (loss)/ income $’000		Current $’000	Deferred $’000		Total $’000
UK	(3,476	)	535	(1,279	)	(744	)
Bermuda	(25,702	)	—	—		—
United States	312		1,867	(193	)	1,674
Brazil	21,275		7,872	(447	)	7,425
Italy	9,572		6,752	(1,738	)	5,014
Peru	9,505		3,923	(1,652	)	2,271
Rest of the world	(3,381	)	5,540	(5,638	)	(98	)
	8,105		26,489	(10,947	)	15,542

The reconciliation of earnings/(losses) before provision for income taxes and earnings from unconsolidated companies, net of tax at the statutory tax rate to the provision for income taxes is shown in the table below:

	2016		2015		2014
Year ended December 31,	$'000		$'000		$'000
Earnings/(losses) before provision for income taxes and earnings from unconsolidated companies, net of tax	40,756		25,354		8,105
Tax charge at statutory tax rate of 20%,15% and Nil% (1)	8,151		3,803		—
Exchange rate movements on deferred tax	(1,785	)	(1,912	)	(3,680	)
Notional interest deductions	(1,812	)	(1,867	)	(1,622	)
Imputed cross border charges	995		716		—
Disallowable goodwill impairment charges	—		2,198		—
Other permanent disallowable expenditure/(income)	483		5,762		2,566
Unrecognized tax loss generated on disposal of Hotel Ritz by Belmond	—		(16,029	)	—
Change in valuation allowance	4,876		16,320		4,573
Difference in taxation rates	9,509		12,948		15,089
Change in provisions for uncertain tax positions	(3,350	)	279		545
Change in tax rates	(643	)	(5,121	)	(2,081	)
Other	(56	)	(56	)	152
Provision for income taxes	16,368		17,041		15,542
(1) The Company migrated its tax residence to the United Kingdom on April 1, 2015, which has a statutory tax rate of 20%. Prior to that date, the Company was tax resident in Bermuda, which does not impose an income tax. The statutory tax rate of 15% represents the average statutory tax rate for the 12 months ended December, 31 2015.

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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 summarizes Belmond’s net deferred tax assets and liabilities:

	2016		2015		2014
Year ended December 31,	$’000		$’000		$’000
Operating loss carry-forwards	82,292		89,513		111,779
Pensions	255		63		477
Share-based compensation	3,617		2,978		3,872
Other	8,283		8,952		11,559
Less: Valuation allowance	(70,241	)	(69,928	)	(91,462	)
Net deferred tax assets	24,206		31,578		36,225
Other	(5,032	)	(7,427	)	(6,138	)
Property, plant and equipment	(141,231	)	(147,265	)	(162,625	)
Deferred tax liabilities	(146,263	)	(154,692	)	(168,763	)
Net deferred tax liabilities	(122,057	)	(123,114	)	(132,538	)

The Company nets deferred tax assets and liabilities where permitted to do so on a jurisdictional basis.

Non-current deferred income tax liabilities are presented separately on the face of the consolidated balance sheets for all periods and non-current deferred tax assets are included within Other assets.

The gross amount of tax loss carry-forwards is $369,523,000 at December 31, 2016 (2015 - $354,717,000). Of this amount, $11,715,000 will expire in the five years ending December 31, 2021 and a further $78,755,000 will expire in the five years ending December 31, 2026. The remaining losses of $279,053,000 will expire after December 31, 2026 or have no expiry date. After weighing all positive and negative evidence, a valuation allowance has been provided against deferred tax assets where management believes it is more likely than not that the benefits associated with these assets will not be realized.

A deferred tax liability of $1,669,000 (2015 - $541,000) has been recognized in respect of income taxes and foreign withholding taxes on the excess of the amount for financial reporting purposes over the tax basis of the investments in foreign joint ventures. Except for earnings that are currently distributed, income taxes and foreign withholding taxes have not been recognized on the excess of the amount for financial reporting purposes over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration. The cumulative amount of such unremitted earnings is approximately $1,355,000,000 at December 31, 2016 (2015 - $1,267,000,000). The determination of the additional deferred taxes that have not been provided is not practical.

Belmond’s 2016 tax provision of $16,368,000 (2015 - $17,041,000; 2014 - $15,542,000) included a benefit of $3,350,000 (2015 - charge of $279,000; 2014 - charge of $545,000) in respect of the provision for uncertain tax positions, of which a charge of $639,000 (2015 - charge of $247,000; 2014 - benefit of $426,000) related to the potential interest and penalty costs associated with the uncertain tax positions.

The 2016 provision for income taxes included a deferred tax provision of $4,876,000 in respect of valuation allowances due to a change in judgment concerning Belmond’s ability to realize loss carryforwards and other deferred tax assets in certain jurisdictions compared to a $16,320,000 provision in 2015.

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At December 31, 2016, the total amounts of unrecognized tax benefits included the following:

	Total		Principal		Interest		Penalties
Year ended December 31, 2016	$’000		$’000		$’000		$’000
Balance, January 1, 2016	3,678		2,967		656		55
Additional uncertain tax provision identified during the year	78		61		4		13
Increase to uncertain tax provision on prior year positions	4		—		4		—
Uncertain tax provisions settled during the year	(3,308	)	(2,668	)	(640	)	—
Decreases as a result of expiration of the statute of limitations	(124	)	(104	)	(2	)	(18	)
Foreign exchange	(10	)	(7	)	(1	)	(2	)
Balance at December 31, 2016	318		249		21		48

At December 31, 2016, Belmond recognized a $318,000 liability in respect of its uncertain tax positions. The entire balance of unrecognized tax benefit at December 31, 2016, if recognized, would affect the effective tax rate.

At December 31, 2015, the total amounts of unrecognized tax benefits included the following:

	Total		Principal		Interest		Penalties
Year ended December 31, 2015	$’000		$’000		$’000		$’000
Balance at January 1, 2015	3,437		2,966		416		55
Additional uncertain tax provision identified during the year	78		62		7		9
Increase to uncertain tax provision on prior year positions	236		—		236		—
Decreases as a result of expiration of the statute of limitations	(35	)	(30	)	(2	)	(3	)
Foreign exchange	(38	)	(31	)	(1	)	(6	)
Balance at December 31, 2015	3,678		2,967		656		55

At December 31, 2015, Belmond recognized a $3,678,000 liability in respect of its uncertain tax positions. The entire balance of unrecognized tax benefit at December 31, 2015, if recognized, would affect the effective tax rate.

At December 31, 2014, the total amounts of unrecognized tax benefits included the following:

	Total		Principal		Interest		Penalties
Year ended December 31, 2014	$’000		$’000		$’000		$’000
Balance, January 1, 2014	2,988		2,935		7		46
Additional uncertain tax provision identified during the year	523		90		413		20
Increase to uncertain tax provision on prior year positions	49		49		—		—
Uncertain tax provisions settled during the year	(49	)	(49	)	—		—
Decreases as a result of expiration of the statute of limitations	(27	)	(20	)	(3	)	(4	)
Foreign exchange	(47	)	(39	)	(1	)	(7	)
Balance, December 31, 2014	3,437		2,966		416		55

At December 31, 2014, Belmond recognized a $3,437,000 liability in respect of its uncertain tax positions. The entire balance of unrecognized tax benefit at December 31, 2014, if recognized, would affect the effective tax rate.

Certain subsidiaries of the Company are subject to taxation in the United States and various states and other non-U.S. jurisdictions. As of December 31, 2016, the earliest year in any jurisdiction which is open to examination by the tax authorities is 2002.

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Belmond believes that it is reasonably possible that within the next 12 months the uncertain tax provision will decrease by approximately $80,000 as a result of expiration of uncertain tax positions in certain jurisdictions in which Belmond operates. These amounts relate primarily to transfer pricing inquiries with the tax authorities.

14.    Interest expense

The balances in interest expense are as follows:

	2016		2015		2014
Year ended December 31,	$’000		$’000		$’000
Interest expense on long-term debt and obligations under capital lease	27,090		27,380		30,270
Withholding tax provision classified as interest	—		(1,476	)	2,576
Interest on legal settlements	(979	)	3,294		—
Amortization of debt issuance costs and discount on secured term loan	3,044		2,903		3,921
Total interest expense	29,155		32,101		36,767

15.    Supplemental cash flow information

	2016	2015	2014
Year ended December 31,	$’000	$’000	$’000
Cash paid during the period for:
Interest	40,930	27,828	30,147
Income taxes, net of refunds	19,804	18,306	21,454

To reflect the actual cash paid for capital expenditure to acquire property, plant and equipment, increases in accounts payable for capital expenditure are non-cash and excluded from capital expenditure, while decreases are cash payments and included. The changes in accounts payable were a decrease of $223,000 and $229,000 for the years ended December 31, 2016 and 2015, respectively.

During the year ended December 31, 2016, cash paid during the period for interest of $40,930,000 (December 31, 2015 - $27,828,000) included the payment of accrued interest on a 1984 development loan from a municipal agency that was fully repaid by Charleston Center LLC in June 2016. See Note 10.

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16.    Restricted cash

The major balances in restricted cash are as follows:

	2016	2015
December 31,	$’000	$’000
Cash deposits required to be held with lending banks as collateral	755	749
Prepaid customer deposits which will be released to Belmond under its revenue recognition policy	1,341	1,909
Bonds and guarantees	489	659
Total restricted cash	2,585	3,317

Restricted cash classified as long-term and included in other assets on the consolidated balance sheet at December 31, 2016 was $755,000 (December 31, 2015 - $749,000).

17.Shareholders’ equity

(a)Dual common share capitalization

The Company has been capitalized with class A common shares, of which there are 240,000,000 authorized, and class B common shares, of which there are 120,000,000 authorized, each convertible at any time into one class A common share. In general, holders of class A and class B common shares vote together as a single class, with holders of class B shares having one vote per share and holders of class A shares having one tenth of one vote per share. In all other substantial respects, the class A and class B common shares are the same.

(b)Shareholder rights agreement

The Company has in place a shareholder rights agreement which will be implemented not earlier than the tenth day following the first to occur of (i) the public announcement of the acquisition by a person (other than a subsidiary of the Company) of 15% or more of the outstanding class A common shares or 15% or more of the outstanding class B common shares, and (ii) the commencement or announcement of a tender offer or exchange offer by a person for 30% or more of the outstanding class A common shares or 30% or more of the outstanding class B common shares. At that time, the rights will detach from the class A and class B common shares, and the holders of the rights will be entitled to purchase, for each right held, one one hundredth of a series A junior participating preferred share of the Company at an exercise price of $70 (the “Purchase Price”) for each one one hundredth of such junior preferred share, subject to adjustment in certain events. From and after the date on which any person acquires beneficial ownership of 15% or more of the outstanding class A common shares or 15% or more of the outstanding class B common shares, each holder of a right (other than the acquiring person) will be entitled upon exercise to receive, at the then current Purchase Price and in lieu of the junior preferred shares, that number of class A or class B common shares (depending on whether the right was previously attached to a class A or B share) having a market value of twice the Purchase Price. If the Company is acquired or 50% or more of its consolidated assets or earning power is sold, each holder of a right will be entitled to receive, upon exercise at the then current Purchase Price, that amount of common equity of the acquiring company which at the time of such transaction would have a market value of two times the Purchase Price. Also, the Company’s board of directors may exchange all or some of the rights for class A and class B common shares (depending on whether the right was previously attached to a class A or B share) if any person acquires 15% beneficial ownership as described above, but less than 50% beneficial ownership. The rights will expire on June 1, 2020 but may be redeemed at a price of $0.05 per right at any time prior to the tenth day following the date on which a person acquires beneficial ownership of 15% or more of the outstanding class A common shares or 15% or more of the outstanding class B common shares.

(c)Acquired shares

Included in shareholders’ equity is a reduction for 18,044,478 class B common shares of the Company that a subsidiary of the Company acquired in 2002. Under applicable Bermuda law, these shares are outstanding and may be voted, although in computing earnings per share these shares are treated as a reduction to outstanding shares.

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(d)Preferred shares

The Company has 30,000,000 authorized preferred shares, par value $0.01 each, 500,000 of which have been reserved for issuance as series A junior participating preferred shares upon exercise of preferred share purchase rights held by class A and B common shareholders in connection with the shareholder rights agreement.

18.    Share-based compensation plans

At December 31, 2016, Belmond had two share-based compensation plans, the 2004 stock option plan and the 2009 share award and incentive plan. The compensation cost that has been charged to selling, general and administrative expense for these plans was $6,272,000 for the year ended December 31, 2016 (2015 - $6,707,000; 2014 - $7,928,000). Cash received from exercised options and vested awards was $17,000 for the year ended December 31, 2016 (2015 - $35,000; 2014 - $19,000). The total compensation cost related to unexercised options and unvested share awards at December 31, 2016 to be recognized over the period January 1, 2017 to December 31, 2020, was $7,990,000 and the weighted average period over which it is expected to be recognized is 26 months. Measured from the grant date, substantially all awards of deferred shares and restricted shares have a maximum term of four years, and substantially all awards of share options have a maximum term of ten years. There were no grants under the 2004 stock option plan during the year ended December 31, 2016.

(a)2004 stock option plans

Under the Company’s 2004 stock option plan, options to purchase up to 1,000,000 class A common shares could be awarded to employees of Belmond at fair market value at the date of grant.  Options are exercisable three years after award and must be exercised ten years from the date of grant. At December 31, 2016, 66,350 class A common shares were reserved under the 2004 plan. At December 31, 2016, no shares remain available for future grants under the 2004 plan as these have been transferred to the 2009 plan described below which became effective in 2009.

Details of share option transactions under the 2004 stock option plan are as follows:

	Number of shares subject to options		Weighted average exercise price $	Weighted average remaining contractual life in years	Aggregate intrinsic value $’000
Outstanding — January 1, 2015	216,350		30.45
Exercised	(29,262	)	5.89
Forfeited, canceled or expired	(101,438	)	32.59
Outstanding — December 31, 2015	85,650		36.30
Exercised	(2,548	)	5.89
Forfeited, canceled or expired	(16,752	)	27.75
Outstanding — December 31, 2016	66,350		39.63	1.2	116
Exercisable — December 31, 2016	66,350		39.63	1.2	116

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The options outstanding under the 2004 plans at December 31, 2016 were as follows:

Exercise prices $	Outstanding at 12/31/2016	Exercisable at 12/31/2016	Remaining contractual lives in years	Exercise prices for outstanding options $	Exercise prices for exercisable options $
5.89	15,600	15,600	1.9	5.89	5.89
35.85	6,550	6,550	1.7	35.85	35.85
46.08	5,550	5,550	1.4	46.08	46.08
51.90	4,950	4,950	1.2	51.90	51.90
52.51	27,250	27,250	0.7	52.51	52.51
52.51	1,050	1,050	0.2	52.51	52.51
52.59	2,350	2,350	0.4	52.59	52.59
59.23	3,050	3,050	0.9	59.23	59.23
	66,350	66,350

The fair value of options which were exercised in the year to December 31, 2016 was $5,000. No options vested and no options were granted under the plans during the year ended December 31, 2016.

(b)2009 share award and incentive plan

The Company's 2009 share award and incentive plan became effective in June 2009 and replaced the 2000 stock option plan, 2004 stock option plan and 2007 performance share plan (the “Pre-existing Plans”). A total of 1,084,550 class A common shares plus the number of class A common shares subject to outstanding awards under the Pre-existing Plans which become available after June 2009 as a result of expirations, cancellations, forfeitures or terminations, were reserved for issuance for awards under the 2009 share award and incentive plan. In 2010, the 2009 plan was amended to increase by 4,000,000 the number of class A shares authorized for issuance under the plan, and in 2012 by another 5,000,000 class A shares.

The 2009 plan permits awards of stock options, stock appreciation rights, restricted shares, deferred shares, bonus shares and awards in lieu of obligations, dividend equivalents, other share-based awards, performance-based awards, or any combination of the foregoing. Each type of award is granted and vests based on its own terms, as determined by the Compensation Committee of the Company’s board of directors.

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During 2016, the following awards were made under the 2009 share award and incentive plan on the following dates. Estimates of fair values of share options and deferred shares with and without performance criteria were made using the Black-Scholes options pricing model.

2009 share award and incentive plan	Class A common shares	Date granted	Vesting date	Exercise price	Expected share price volatility	Risk-free interest rate	Expected dividends per share	Expected life of awards
Share options	81,925	December 4, 2016	December 4, 2017	$12.75	29%	1.40%	$—	2.5 years
Share options	81,925	December 4, 2016	December 4, 2018	$12.75	30%	1.40%	$—	3.5 years
Share options	81,925	December 4, 2016	December 4, 2019	$12.75	34%	1.84%	$—	4.5 years
Share options	81,925	December 4, 2016	December 4, 2020	$12.75	40%	1.84%	$—	5.5 years
Share options	47,650	June 24, 2016	June 24, 2017	$9.64	29%	0.76%	$—	2.5 years
Share options	47,650	June 24, 2016	June 24, 2018	$9.64	30%	0.76%	$—	3.5 years
Share options	47,650	June 24, 2016	June 24, 2019	$9.64	34%	1.08%	$—	4.5 years
Share options	47,650	June 24, 2016	June 24, 2020	$9.64	39%	1.08%	$—	5.5 years

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During the year ended December 31, 2016, the following deferred and restricted share awards were made under the 2009 share award and incentive plan on the following dates:

2009 share award and incentive plan	Class A common shares	Date granted	Vesting date	Purchase price
Deferred shares without performance criteria	3,287	August 1, 2016	August 1, 2017	$0.01
Deferred shares without performance criteria	3,287	August 1, 2016	August 1, 2018	$0.01
Deferred shares without performance criteria	3,286	August 1, 2016	August 1, 2019	$0.01
Deferred shares without performance criteria	3,286	August 1, 2016	August 1, 2020	$0.01
Restricted shares without performance criteria	81,551	June 24, 2016	June 24, 2017	$0.01
Restricted shares without performance criteria	61,164	June 24, 2016	On retirement	$0.01
Restricted shares without performance criteria	43,625	March 18, 2016	March 18, 2017	$0.01
Restricted shares without performance criteria	43,625	March 18, 2016	March 18, 2018	$0.01
Restricted shares without performance criteria	43,625	March 18, 2016	March 18, 2019	$0.01
Restricted shares without performance criteria	43,625	March 18, 2016	March 18, 2020	$0.01
Deferred shares with performance criteria	293,900	March 18, 2016	March 18, 2019	$0.01

Transactions relating to share options under the 2009 plan have been as follows:

	Number of shares subject to options		Weighted average exercise price $	Weighted average remaining contractual life in years	Aggregate intrinsic value $’000
Outstanding — January 1, 2015	3,089,633		11.20
Granted	759,474		10.48
Exercised	(100,262	)	8.60
Forfeited, canceled or expired	(1,045,888	)	11.51
Outstanding — December 31, 2015	2,702,957		10.97
Granted	518,300		11.61
Exercised	(59,833	)	9.35
Forfeited, canceled or expired	(516,935	)	10.77
Outstanding — December 31, 2016	2,644,489		11.17	7.3	6,175
Exercisable — December 31, 2016	1,347,734		10.91	5.8	3,592

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The options outstanding under the 2009 plan at December 31, 2016 were as follows:

Exercise prices $	Outstanding at 12/31/2016	Exercisable at 12/31/2016	Remaining contractual lives in years	Exercise prices for outstanding options $	Exercise prices for exercisable options $
8.38	28,600	28,600	2.4	8.38	8.38
8.91	45,700	45,700	2.9	8.91	8.91
8.37	42,200	42,200	3.4	8.37	8.37
11.44	85,550	85,550	3.9	11.44	11.44
11.69	65,100	65,100	4.4	11.69	11.69
8.06	181,750	181,750	4.9	8.06	8.06
9.95	31,700	31,700	5.2	9.95	9.95
8.42	115,500	115,500	5.4	8.42	8.42
11.32	198,350	198,350	5.9	11.32	11.32
9.95	31,700	31,700	6.1	9.95	9.95
11.74	103,800	103,800	6.4	11.74	11.74
14.51	242,950	242,950	7.0	14.51	14.51
14.08	127,100	23,000	7.5	14.08	14.08
11.57	286,183	—	8.0	11.57	—
12.50	96,169	30,919	8.5	12.50	12.50
13.75	96,165	24,041	8.7	13.75	13.75
8.98	375,072	96,874	8.9	8.98	8.98
9.64	163,200	—	9.5	9.64	—
12.75	327,700	—	9.9	12.75	—
	2,644,489	1,347,734

The fair value of option grants made in the year to December 31, 2016 was $1,693,000. The fair value of options which became exercisable in the year to December 31, 2016 was $3,266,000. The fair value of options which were exercised in the year was $277,000. The number of options which vested during the year was 654,469.

Transactions relating to deferred shares and restricted shares under the 2009 plan have been as follows:

	Number of shares subject to awards		Weighted average exercise price $	Aggregate intrinsic value $'000
Outstanding — January 1, 2015	1,851,309		0.01
Granted	653,787		0.01
Vested and issued	(535,407	)	0.01
Forfeited, canceled or expired	(807,502	)	0.01
Outstanding — December 31, 2015	1,162,187		0.01
Granted	624,261		0.01
Vested and issued	(331,299	)	0.01
Forfeited, canceled or expired	(261,374	)	0.01
Outstanding — December 31, 2016	1,193,775		0.01	15,925

At December 31, 2016, awards of deferred shares and restricted shares on 1,193,775 class A common shares were reserved under the 2009 plan. Of these awards, 702,572 deferred shares and restricted shares do not specify any performance criteria and will vest up to March 2020. The remaining awards of up to 491,203 deferred shares are subject to performance and market criteria.

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The fair value of deferred shares and restricted shares awarded in the year to December 31, 2016 was $5,848,000. The fair value of deferred shares vested in the year to December 31, 2016 was $3,952,000.

There were no vested and unissued deferred share or restricted shares awards as of December 31, 2016.

Estimates of the fair value of the share options on the grant date using the Black-Scholes options pricing model were based on the following assumptions:

Year ended December 31,	2016	2015	2014
Expected share price volatility	29% - 40%	28% - 58%	45% - 46%
Risk-free interest rate	0.76% - 1.84%	0.65% - 1.83%	1.53% - 1.71%
Expected annual dividends per share	$—	$—	$—
Expected life of share options	2.5 - 5.5 years	2.5 - 6.9 years	4.5 years

19.    Commitments and contingencies

Belmond Copacabana Palace

In February 2013, the State of Rio de Janeiro Court of Justice affirmed a 2011 decision of a Rio state trial court against Sea Containers Ltd (“SCL”) in lawsuits brought against SCL by minority shareholders in Companhia Hoteis Palace (“CHP”), the company that owns Belmond Copacabana Palace, relating to the recapitalization of CHP in 1995, but the Court reduced the total award against SCL to approximately $27,000,000. SCL further appealed the judgments during the second quarter of 2013 to the Superior Court of Justice in Brasilia. SCL sold its shares in CHP to the Company in 2000. Years later, in 2006, SCL entered insolvency proceedings in the U.S. and Bermuda that are continuing in Bermuda. Possible claims could be asserted against the Company or CHP in connection with this Brazilian litigation that has to date only involved SCL, although no claims have been asserted.

As a precautionary measure to defend the hotel, CHP commenced a declaratory lawsuit in the Rio state court in December 2013 seeking judicial declarations that no fraud was committed against the SCL plaintiffs when the shares in CHP were sold to the Company in 2000 and that the sale of the shares did not render SCL insolvent. Pending rulings on those declarations, the court granted CHP an injunction preventing the SCL plaintiffs from provisionally enforcing their 2011 judgments against CHP, which judgment was subsequently reversed on appeal in May 2014. In September 2014, CHP sought reconsideration from the appellate court of this decision, but the court dismissed its request, resulting in the return of the declaratory lawsuit proceedings to the Rio State Court.

Management cannot estimate the range of possible loss if the SCL plaintiffs assert claims against the Company or CHP, and Belmond has made no accruals in respect of this matter. If any such claims were brought, Belmond would continue to defend its interests vigorously.

Ubud Hanging Gardens

In November 2013, the third-party owner of Ubud Hanging Gardens in Bali, Indonesia dispossessed Belmond from the hotel under long-term lease without prior notice. As a result, Belmond was unable to continue operating the hotel and, accordingly, to prevent any confusion to its guests, Belmond ceased referring to the property in its sales and marketing materials, including all electronic marketing.

Belmond believed that the owner's actions were unlawful and in breach of the lease arrangement and constituted a wrongful dispossession. Belmond pursued its legal remedies through arbitration proceedings required under the lease. In June 2015, a Singapore arbitration panel issued its final award in favor of Belmond, holding that the owner had breached Indonesian law and the lease, and granting monetary damages and costs to the Company in an amount equal to approximately $8,500,000. Since its receipt of the arbitral award, Belmond has been engaged in the process of enforcing this arbitral award in the Indonesian courts. Starting in April 2014, the Indonesian trial courts have dismissed six separate actions filed by the owner for lack of jurisdiction due to the arbitration clause in the parties’ lease. The owner has appealed these decisions, one of which was reversed by the Appellate Court in October 2014. Belmond appealed this case to the Indonesian Supreme Court, which in December 2016 affirmed the Appellate Court's decision. Belmond is considering its position but is likely to seek review for reconsideration by the Supreme Court. As supplemental proceedings to its arbitration claim, Belmond commenced contempt proceedings in the High Court in

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London, England, where the owner resided, for pursuing the Indonesian proceedings contrary to an earlier High Court injunction, and obtained against the owner in July 2014 a contempt order, which subsequently resulted in the court issuing a committal order of imprisonment for 120 days. The owner left England before the court order was issued and has not yet served the sentence.

Belmond does not believe there is any merit in the owner’s outstanding Indonesian actions and is vigorously defending its rights while it seeks to enforce the Singapore arbitral award. While the Company can give no assurances, it believes that it should ultimately be able to enforce its arbitral award. Given the uncertainty involved in this litigation, Belmond recorded in the year ended December 31, 2013, a non-cash impairment charge in the amount of $7,031,000 relating to long-lived assets and goodwill of Ubud Hanging Gardens and has not booked a receivable in respect of the award.

Belmond Hotel das Cataratas

In September 2014, the Brazilian Ministry of Planning, Budget and Management notified the Company that it was denying the Company's application to extend the term or reduce the rent under the lease for Belmond Hotel das Cataratas, which was entered into in 2007. Belmond had applied for the amendment in 2009 based on its claim that it suffered additional unanticipated and/or unforeseeable costs in performing the refurbishment of the hotel as required by the lease and related tender documentation in order to raise the standard of the property to a five star luxury standard.

Prior to August 2014, with the agreement of the Ministry, the Company had been paying the base annual rent without an annual adjustment for inflation as provided for in the lease, pending resolution of Belmond’s application. Throughout this period, the Company had expensed the full rental amount and has fully accrued the difference between the rental charge and the amount actually paid. Based on the Ministry’s decision denying any relief, the Ministry directed the Company that it would henceforth assess rent at the contractual rate, which has been included in the table of future rental payments as at December 31, 2016, and that it must pay the difference between the contractual rent and the rent that had been actually paid. On March 20, 2015, the Ministry provided notice to the hotel that an aggregate amount of approximately R$17,000,000 ($5,215,000) was due on March 31, 2015 as a result of its rejection of any relief sought by Belmond.

The Company appealed to the Ministry to reconsider its decision on both procedural and substantive grounds. Pending this requested reconsideration and exhaustion of administrative remedies, the Company did not pay to the Ministry the amount claimed. The Company filed a lawsuit in the Federal Court in Paraná State in August 2016 against the Government of Brazil regarding the Ministry’s failure to properly consider and modify the lease concession for Belmond Hotel das Cataratas. The Federal Court granted the Company’s request for an injunction against the Government enforcing its claim and granted the Company’s request for a 25% preliminary reduction in rent, pending a decision on the merits, which the Superior Court upheld on appeal in a decision rendered in September 2016. The Government appealed to a three judge panel of the Superior Court, which upheld the decision of the Federal Court in favor of the Company in a judgment rendered in January 2017. A discovery calendar has been agreed for the litigation on the merits in the Federal Court where the Company intends to continue to pursue its claims vigorously.

In the meantime, the Company is paying rent at the reduced amount but continues to accrue rent at the full contractual amount. Amounts accrued at December 31, 2016 totaled R$21,461,000 ($6,583,000). The Company does not believe that any loss above the amounts accrued is likely.  

Belmond Sanctuary Lodge

In January 2015, Peru Belmond Hotels S.A. received notification of a claim filed by the Public Prosecutor's office of the Regional Government of Cusco, seeking annulment of a contract and public deed of amendment extending the term of the Belmond Sanctuary Lodge concession for 10 years from May 2015 to May 2025. The claim alleged that the amendment was invalid principally because the President of the Region, who executed the public deed on December 27, 2013, did not have proper authority to execute the amendment because a resolution dismissing him from office had been issued the day before. The court of first instance dismissed the case in May 2015 on technical grounds and the claimant appealed to the Superior Court of Cusco. At a hearing before the Superior Court of Cusco in September 2015, the Superior Court overturned the decision of the court of first instance and vacated the entire proceeding. The court of first instance reconsidered the matter and again dismissed the Public Prosecutor's claim in January 2016. The Public Prosecutor's office appealed this decision as well and at a hearing on June 16, 2016, the Superior Court of Cusco reaffirmed the decision of the court of first instance. The Public Prosecutor has declined to appeal the matter to the Supreme Court of Peru.

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Belmond Miraflores Park

The Company is contesting a claim by the municipality of Miraflores in Lima, Peru, the location of its Belmond Miraflores Park Hotel (“BMP”), that BMP has violated a municipal nuisance ordinance by generating noise and vibration that disturbed certain owners of apartments in an adjoining residential building. The local administrative court ruled in favor of the municipality, levying a nominal fine and injunctive relief that included the potential closure of BMP until the noise and vibration has been eliminated. In March 2016, after the administrative court's ruling was affirmed at the trial and subsequently, the appellate court level, BMP appealed to the Supreme Court of Peru. Enforcement of the ruling has been stayed pending the appeal. BMP does not expect to receive a ruling and formal notification from the Supreme Court until at least March 2017. Management believes that the risk of closure of BMP is remote because BMP expects to complete a remediation plan by March 2017 and may also seek to acquire the apartments of the owners who sought the relief. Accordingly, management does not believe that a material loss is probable and no accrual has been made in respect of this matter.

Cupecoy Village Development N.V.

In July 2015, Cupecoy Village Development N.V. ("Cupecoy") received notification from the tax authorities in Sint Maarten of an intention to issue tax assessments for periods 2007-2010 in respect of wages taxes, social security, turnover tax and penalties, which Belmond believes indicates a maximum possible loss of $16,500,000. Belmond believes that the report received from the tax authorities contains a number of material miscalculations and misinterpretations of fact and law. The Company had provided a written response to the tax authorities disputing their assessment and expected the resolution of this dispute to result in only an immaterial cost. However, the tax authorities consistently failed to respond or otherwise engage with Belmond or Cupecoy and therefore the Company gave the tax authorities notice that it intended to wind up Cupecoy, which the Company did after receiving no response from the authorities to this notice. In October 2016, following our application to the court, Cupecoy was declared technically insolvent in light of the 2015 tax claim, at which point the Company determined that any liability in respect of Cupecoy was effectively discharged. Cupecoy is currently scheduled for a final bankruptcy declaration in the first quarter of 2017.

"Cipriani" Trademark

In May 2010, after prevailing in litigation at the trial and appellate court levels, Belmond settled litigation in the United Kingdom for infringement of its U.K. and Community (European wide) registrations for the “Cipriani” trademark. Defendants paid the amount of $3,947,000 to Belmond in March 2010 with the balance of $9,833,000 being payable in installments over five years with interest. Belmond received the final payment in the amount of $1,178,000 in June 2015. Subsequent to Belmond’s success before the U.K. courts, there have arisen a number of European trademark opposition and infringement cases relating to Belmond "Cipriani" and "Hotel Cipriani" Community trademarks. These include an ongoing invalidity action filed by Arrigo Cipriani in the European Trade Mark Office against Belmond’s "Cipriani" Community trademark. To date, Belmond has successfully rebutted this challenge at every level of administrative appeal, and this case is now before the General Court where Belmond also expects to prevail. Belmond has recently been successful in securing the cancellation in Portugal of a trademark application filed by an affiliated company of the Cipriani family for “Cipriani”. Belmond has also been successful in obtaining cancellations of "Cipriani" trademark applications made by the Cipriani family's corporate entity in Russia. In addition, there are a number of ongoing trademark disputes with the Cipriani family in Italy: in January 2015, the Cipriani family and affiliated entities commenced proceedings against Belmond in the Court of Venice, asserting that a 1967 agreement pursuant to which the family sold their interest in the Hotel Cipriani constituted a coexistence agreement allowing both the Company to use “Hotel Cipriani” and the Cipriani family to use “Cipriani” and in August 2015, pursuant to a separate claim filed by the Cipriani family, the Court of Venice ruled in favor of the Cipriani family, determining that their use of their full name (rather than just an initial with their surname), would not constitute infringement of the Company’s registered trademark. The Court’s ruling purports to apply to hotels and restaurants on an EU - wide basis (other than the U.K.) rather than only Italy. The Company has appealed this decision. Separate proceedings brought by Belmond in Spain to defend Belmond's marks against a use by the Cipriani family and its affiliated entities of "Cipriani" to promote a restaurant have been stayed pending the outcome of the Venice appeal. While Belmond believes that it has meritorious cases in all of these Italian proceedings, Belmond cannot estimate the range of possible additional loss to Belmond if it should not prevail in any or all of these cases and Belmond has made no accruals in these matters.

The Company and certain of its subsidiaries are parties to various legal proceedings arising in the normal course of business. These proceedings generally include matters relating to labor disputes, tax claims, personal injury cases, lease negotiations and ownership disputes. The outcome of each of these matters cannot be determined with certainty, and the liability that the relevant parties may ultimately incur with respect to any one of these matters in the event of a negative outcome may be in excess of amounts currently accrued for with respect to these matters. Where a reasonable estimate can be made, the additional losses or range of loss that may be incurred in excess of the amount recognized from the various legal proceedings arising in the normal course of business are disclosed separately for each claim, including a reference to where it is disclosed. However, for certain of

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the legal proceedings, management is unable to estimate the loss or range of loss that may result from these claims due to the highly complex nature or early stage of the legal proceedings. 

Belmond has granted to James Sherwood, a former director of the Company, a right of first refusal to purchase the Belmond Hotel Cipriani in Venice, Italy in the event Belmond proposes to sell it. The purchase price would be the offered sale price in the case of a cash sale or the fair market value of the hotel, as determined by an independent valuer, in the case of a non-cash sale. Mr. Sherwood has also been granted an option to purchase the hotel at fair market value if a change in control of the Company occurs. Mr. Sherwood may elect to pay 80% of the purchase price if he exercises his right of first refusal, or 100% of the purchase price if he exercises his purchase option, by a non-recourse promissory note secured by the hotel payable in ten equal annual installments with interest at LIBOR. This right of first refusal and purchase option are not assignable and expire one year after Mr. Sherwood’s death. These agreements relating to the Belmond Hotel Cipriani between Mr. Sherwood and Belmond and its predecessor companies have been in place since 1983 and were last amended and restated in 2005.

Capital commitments

Outstanding contracts to purchase property, plant and equipment were approximately $7,772,000 at December 31, 2016 (December 31, 2015 - $8,662,000).

Future rental payments and rental expense under operating leases

Future rental payments under operating leases in respect of equipment rentals and leased premises are payable as follows:

Year ended December 31,	$’000
2017	12,028
2018	12,254
2019	10,549
2020	10,379
2021	10,935
2022 and thereafter	70,275
	126,420

Rental expense under operating leases for the year ended December 31, 2016 amounted to $13,037,000 (2015 - $10,675,000; 2014 - $13,007,000).

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20.    Fair value measurements

(a)    Financial instruments recorded at fair value

The following tables summarize the valuation of Belmond’s assets and liabilities by the fair value hierarchy at December 31, 2016 and 2015:

	Level 1	Level 2		Level 3	Total
December 31, 2016	$'000	$'000		$'000	$'000
Assets at fair value:
Derivative financial instruments	—	—		—	—
Total assets	—	—		—	—
Liabilities at fair value:
Derivative financial instruments	—	(3,364	)	—	(3,364	)
Total net liabilities	—	(3,364	)	—	(3,364	)

	Level 1	Level 2		Level 3	Total
December 31, 2015	$'000	$'000		$'000	$'000
Assets at fair value:
Derivative financial instruments	—	4		—	4
Total assets	—	4		—	4
Liabilities at fair value:
Derivative financial instruments	—	(4,464	)	—	(4,464	)
Total net liabilities	—	(4,460	)	—	(4,460	)

During the years ended December 31, 2016 and 2015, there were no transfers between levels of the fair value hierarchy.

(b)    Other financial instruments

Certain methods and assumptions are used to estimate the fair value of each class of financial instruments. The carrying amount of current assets and current liabilities as disclosed on the consolidated balance sheets approximate their fair value due to the short-term nature of those instruments.

The fair value of Belmond's long-term debt, excluding interest rate swaps and caps, is determined using the contractual cash flows and credit-adjusted discount curves. The fair value of the debt is the present value of those contractual cash flows which are discounted at the current market cost of debt and adjusted for the credit spreads. Credit spreads take into consideration general market conditions, maturity and collateral.

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The estimated carrying values, fair values, and levels of the fair value hierarchy of Belmond's long-term debt as of December 31, 2016 and 2015 were as follows:

		December 31, 2016		December 31, 2015
		Carrying amounts $’000	Fair value $’000	Carrying amounts $’000	Fair value $’000
Total long-term debt, before deduction of discount on secured term loan and debt issuance costs, excluding obligations under capital leases	Level 2	602,083	626,613	596,428	630,455

See Note 10.

(c)    Non-financial assets measured at fair value on a non-recurring basis

The estimated fair values of Belmond’s non-financial assets measured on a non-recurring basis for the years ended December 31, 2016, 2015 and 2014 were as follows:

		Fair value measurement inputs
	Fair value $’000	Level 1 $’000	Level 2 $’000	Level 3 $’000	Total lossesin yearendedDecember 31,2016 $’000
Property, plant and equipment	—	—	—	—	(1,007	)

		Fair value measurement inputs
	Fair value $’000	Level 1 $’000	Level 2 $’000	Level 3 $’000	Total lossesin yearendedDecember 31,2015 $’000
Goodwill	10,050	—	—	10,050	(9,796	)

		Fair value measurement inputs
	Fair value $’000	Level 1 $’000	Level 2 $’000	Level 3 $’000	Total lossesin yearendedDecember 31,2014 $’000
Property, plant and equipment	2,488	—	—	2,488	(1,211	)

Property, plant and equipment

For the year ended December 31, 2016, property, plant and equipment at Belmond Orcaella with a carrying amount of $1,007,000 was written down to fair value of $Nil, resulting in a non-cash impairment charge of $1,007,000.

For the year ended December 31, 2014, train carriages of Belmond's former Great South Pacific Express train which are held in Australia and not in service with a carrying value of $3,699,000 were written down to fair value of $2,488,000, resulting in a non-cash impairment charge of $1,211,000.

These impairments are included in earnings from continuing operations in the period incurred. See Note 7.

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Goodwill

For the year ended December 31, 2015, goodwill of Belmond Jimbaran Puri, Belmond La Résidence Phou Vao and Belmond Northern Belle with a combined carrying value of $5,698,000 was written down to fair value of $Nil, resulting in a non-cash impairment charge of $5,698,000. Also, in the year ended December 31, 2015, goodwill of Belmond Grand Hotel Europe with a carrying value of $14,148,000 was written down to fair value of $10,050,000, resulting in a non-cash impairment charge of $4,098,000.

These impairments are included in earnings from continuing operations in the period incurred. See Note 8.

21.    Derivatives and hedging activities

Belmond hedges its interest rate risk, ensuring that an element of its floating rate interest is fixed by using interest rate derivatives. Belmond designates these derivatives as cashflow hedges. Additionally, Belmond designates its foreign currency borrowings and currency derivatives as net investment hedges of overseas operations.

Cash flow hedges of interest rate risk

As of December 31, 2016 and 2015, Belmond had the following outstanding interest rate derivatives stated at their notional amounts in local currency that were designated as cash flow hedges of interest rate risk:

	2016		2015
December 31,	’000		’000
Interest rate swaps	€	72,938	€	73,688
Interest rate swaps	$	210,756	$	212,481
Interest rate caps	$	17,200	$	17,200

Fair value

The table below presents the fair value of Belmond’s derivative financial instruments and their classification as of December 31, 2016 and 2015:

		Fair value as of		Fair value as of
		December 31, 2016		December 31, 2015
	Balance sheet location	$’000		$’000
Derivatives designated in a cash flow hedging relationship:
Interest rate derivatives	Other assets	—		4
Interest rate derivatives	Accrued liabilities	(2,310	)	(2,731	)
Interest rate derivatives	Other liabilities	(1,054	)	(1,733	)
Total		(3,364	)	(4,460	)

Offsetting

There was no offsetting within derivative assets or derivative liabilities at December 31, 2016 and 2015. However, derivatives are subject to master netting arrangements.

Other comprehensive income

Information concerning the movements in other comprehensive income/(loss) for cash flow hedges of interest rate risk is shown in Note 22. At December 31, 2016, the amount accounted for in other comprehensive income/(loss) which is expected to be reclassified to interest expense in the next 12 months is $2,266,000. Movement in other comprehensive income/(loss) for net investment hedges recorded through foreign currency translation adjustments for the year ended December 31, 2016 was a $4,975,000 gain (2015 - $18,221,000 gain; 2014 - $24,816,000 gain).

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Credit-risk-related contingent features

Belmond has agreements with some of its derivative counterparties that contain provisions under which, if Belmond defaults on the debt associated with the hedging instrument, Belmond could also be declared in default in respect of its derivative obligations.

As of December 31, 2016, the fair value of derivatives in a net liability position, which includes accrued interest and an adjustment for non-performance risk, related to these agreements was $3,364,000 (2015 - $4,464,000). If Belmond breached any of the provisions, it would be required to settle its obligations under the agreements at their termination value of $3,370,000 (2015 - $4,513,000).

Non-derivative financial instruments — net investment hedges

Belmond uses certain of its debt denominated in foreign currency to hedge portions of its net investments in foreign operations against adverse movements in exchange rates. Belmond’s designates its euro-denominated indebtedness as a net investment hedge of long-term investments in its euro-functional subsidiaries. These contracts are included in non-derivative hedging instruments. The notional value of non-derivative hedging instruments was $153,472,000 at December 31, 2016 (2015 - $160,138,000), being a liability of Belmond.

22.    Accumulated other comprehensive loss

Changes in accumulated other comprehensive income/(loss) (“AOCI”) by component (net of tax) for the years ended December 31, 2016 and 2015 were as follows:

	Foreign currency translation adjustments		Derivative financial instruments		Pension liability		Total
	$’000		$’000		$’000		$’000
Balance at January 1, 2015	(232,328	)	(3,569	)	(10,523	)	(246,420	)
Other comprehensive (loss)/income before reclassifications, net of tax provision/(benefit) of $Nil, $(1,310) and $147	(88,180	)	(3,471	)	580		(91,071	)
Amounts reclassified from AOCI, net of tax provision of $Nil, $958 and $Nil	—		2,949		—		2,949
Net current period other comprehensive (loss)/income	(88,180	)	(522	)	580		(88,122	)
Balance at December 31, 2015	(320,508	)	(4,091	)	(9,943	)	(334,542	)
Other comprehensive loss before reclassifications, net of tax benefit of $(809), $(889) and $(530)	(10,983	)	(1,942	)	(2,119	)	(15,044	)
Amounts reclassified from AOCI, net of tax provision of $Nil, $1,111 and $Nil	—		2,809		—		2,809
Net current period other comprehensive (loss)/income	(10,983	)	867		(2,119	)	(12,235	)
Balance at December 31, 2016	(331,491	)	(3,224	)	(12,062	)	(346,777	)

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Reclassifications out of AOCI (net of tax) were as follows:

	Amount reclassified from AOCI
	December 31, 2016	December 31, 2015
Details about AOCI components	$’000	$’000	Affected line item in the statement of operations
Derivative financial instruments:
Cash flows from derivative financial instruments related to interest payments made for the hedged debt instrument	2,809	2,949	Interest expense
Total reclassifications for the period	2,809	2,949

23.    Segment information

Segment performance is evaluated by the chief operating decision maker based upon segment earnings before gains/(losses) on disposal, impairments, central costs, interest income, interest expense, foreign currency, tax (including tax on earnings from unconsolidated companies), depreciation and amortization, share-based compensation payment and gains/(losses) on extinguishment of debt (“segment profit/(loss)”).

Belmond's operating segments are aggregated into six reportable segments primarily around the type of service being provided—hotels, trains and cruises, and management business/part ownership interests—and are secondarily organized by geography for the hotels, as follows:

• Owned hotels in each of Europe, North America and Rest of world which derive earnings from the hotels that Belmond owns including its one stand-alone restaurant;

• Owned trains and cruises which derive earnings from the train and cruise businesses that Belmond owns;

• Part-owned/managed hotels which derive earnings from hotels that Belmond jointly owns or manages; and

• Part-owned/managed trains which derive earnings from the train businesses that Belmond jointly owns or manages.

The following tables present information regarding these reportable segments. Belmond revised the order of the presentation of these segments in the year ended December 31, 2016 and included a new sub-total to show management fees earned by the Company. In addition, Belmond reclassified certain expenses associated with the Company’s development team from the Part-owned/managed hotels segment to central costs. Prior periods have been re-presented to reflect the current period presentation. There has not been a material impact on the consolidated financial statements.

Revenue from external customers by segment:

	2016	2015	2014
Year ended December 31,	$’000	$’000	$’000
Owned hotels:
Europe	199,251	200,059	212,744
North America	145,868	148,103	142,586
Rest of world	130,255	124,369	142,731
Total owned hotels	475,374	472,531	498,061
Owned trains & cruises	59,287	65,471	74,265
Part-owned/managed hotels	4,400	5,232	5,983
Part-owned/managed trains	10,763	8,151	7,406
Total part-owned/managed	15,163	13,383	13,389
Revenue	549,824	551,385	585,715

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Reconciliation of the total of segment profit to consolidated net earnings/(losses) from operations:

	2016		2015		2014
Year ended December 31,	$’000		$’000		$’000
Owned hotels:
Europe	67,590		65,416		62,770
North America	28,767		31,622		23,986
Rest of world	33,115		31,295		36,539
Total owned hotels	129,472		128,333		123,295
Owned trains & cruises	3,834		6,741		7,300
Part-owned/managed hotels	6,299		4,993		5,829
Part-owned/managed trains	25,553		18,883		16,165
Total part-owned/managed	31,852		23,876		21,994
Reconciliation to net earnings/(losses):
Total segment profit	165,158		158,950		152,589
Gain on disposal of property, plant and equipment and equity method investments	938		20,275		4,128
Impairment of goodwill	—		(9,796	)	—
Impairment of property, plant and equipment	(1,007	)	—		(1,211	)
Central costs	(31,086	)	(40,123	)	(32,351	)
Share-based compensation	(6,272	)	(6,707	)	(7,928	)
Depreciation and amortization	(52,396	)	(50,513	)	(52,004	)
Gain/(loss) on extinguishment of debt	1,200		—		(14,506	)
Other income	—		—		1,257
Interest income	853		926		1,418
Interest expense	(29,155	)	(32,101	)	(36,767	)
Foreign currency, net	9,186		(5,016	)	2,262
Provision for income taxes	(16,368	)	(17,041	)	(15,542	)
Share of (provision for)/benefit from income taxes of unconsolidated companies	(5,650	)	(1,466	)	702
Earnings from continuing operations	35,401		17,388		2,047
Earnings/(losses) from discontinued operations	1,032		(1,534	)	(3,782	)
Net earnings/(losses)	36,433		15,854		(1,735	)

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Reconciliation of assets by segment to total assets:

	2016	2015
December 31,	$’000	$’000
Owned hotels:
Europe	504,758	533,610
North America	468,088	477,949
Rest of world	245,167	227,339
Total owned hotels	1,218,013	1,238,898
Owned trains & cruises	88,069	94,945
Part-owned/ managed hotels	20,007	19,285
Part-owned/ managed trains	68,397	61,961
Total part/owned managed	88,404	81,246
Unallocated corporate	129,582	94,386
Total assets	1,524,068	1,509,475

Reconciliation of capital expenditure to acquire property, plant and equipment by segment:

	2016	2015	2014
Year ended December 31,	$’000	$’000	$’000
Owned hotels:
Europe	11,777	18,648	26,542
North America	9,796	11,881	16,690
Rest of world	19,190	14,168	14,409
Total owned hotels	40,763	44,697	57,641
Owned trains & cruises	12,882	11,415	5,533
Unallocated corporate	1,459	283	280
Total capital expenditure to acquire property, plant and equipment	55,104	56,395	63,454

Carrying value of investment in equity method investees:

	2016	2015
December 31,	$’000	$’000
Eastern & Oriental Express	2,818	2,972
Peru hotels	19,769	18,696
PeruRail	53,652	47,421
Buzios	2,998	2,542
Other	90	93
Total investment in equity method investees	79,327	71,724

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Earnings from unconsolidated companies, net of tax:

	2016	2015	2014
Year ended December 31,	$’000	$’000	$’000
Part-owned/managed hotels	1,112	106	1,949
Part-owned/managed trains	9,901	8,969	7,535
Total earnings from unconsolidated companies, net of tax	11,013	9,075	9,484

Revenue from external customers in Belmond's country of domicile and significant countries (based on the location of the property):

	2016	2015	2014
Year ended December 31,	$’000	$’000	$’000
Bermuda	—	—	—
Italy	128,671	132,385	137,491
United Kingdom	56,016	62,656	68,412
United States	108,238	107,965	104,146
Brazil	73,300	69,142	86,866
All other countries	183,599	179,237	188,800
Revenue	549,824	551,385	585,715

Property, plant and equipment at book value in Belmond's country of domicile and significant countries (based on the location of the property):

	2016	2015
December 31,	$’000	$’000
Bermuda	—	—
Italy	294,773	308,035
United Kingdom	48,577	57,443
United States	343,342	346,942
Brazil	73,843	61,773
All other countries	314,141	304,168
Total property, plant and equipment at book value	1,074,676	1,078,361

24.    Related party transactions

Belmond manages, under long-term contract, the tourist train owned by Eastern and Oriental Express Ltd., in which Belmond has a 25% ownership interest. In the year ended December 31, 2016, Belmond earned management fees from Eastern and Oriental Express Ltd. of $236,000 (2015 - $292,000; 2014 - $362,000), which are recorded in revenue. The amount due to Belmond from Eastern and Oriental Express Ltd. at December 31, 2016 was $4,886,000 (2015 - $4,872,000).

Belmond manages, under long-term contracts in Peru, Belmond Hotel Monasterio, Belmond Palacio Nazarenas, Belmond Sanctuary Lodge, Belmond Hotel Rio Sagrado, PeruRail and Ferrocarril Transandino, in all of which Belmond has a 50% ownership interest. Belmond provides loans, guarantees and other credit accommodation to these joint ventures. In the year ended December 31, 2016, Belmond earned management and guarantee fees from its Peruvian joint ventures of $14,734,000 (2015 - $12,503,000; 2014 - $11,515,000) which are recorded in revenue. The amount due to Belmond from its Peruvian joint ventures at December 31, 2016 was $6,907,000 (2015 - $7,285,000).

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Belmond owns 50% of a company holding real estate in Buzios, Brazil. The amount due to Belmond from the joint venture at December 31, 2016 was $372,000 (2015 - $272,000).

Belmond managed, under long-term contract, the Hotel Ritz by Belmond, in which Belmond had a 50% ownership interest. For the year ended December 31, 2016, Belmond earned $Nil (2015 - $328,000; 2014 - $1,111,000) in management fees from the Hotel Ritz by Belmond which are recorded in revenue, and $Nil (2015 - $301,000; 2014 - $904,000) in interest income. The amount due to Belmond from the Hotel Ritz by Belmond at December 31, 2016 was $Nil (2015 - $Nil). On May 21, 2015, Belmond sold its ownership interest in Hotel Ritz by Belmond. See Note 6.

On the April 19, 2016, Belmond completed the sale of the property, plant and equipment relating to the trains and carriages that were formerly operated as the Great South Pacific Express in Queensland, Australia for consideration of $2,362,400 to the Company’s PeruRail joint venture. The carriages were sold at their carrying value and no gain or loss arose on disposal.

During 2016, Belmond provided conference and banqueting services in the amount of $488,000 to Crawford & Co. and GHS Holdings, LLC, companies in which Mr. Harsha Agadi, who is a member of the board of directors of Belmond, is the Chief Executive Officer and President. Mr. Agadi was appointed Interim Chief Executive Officer and Interim President of Crawford & Co. in August 2015 and as Chief Executive Officer and President in June 2016.

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

ITEM 9A. Controls and Procedures

Disclosure Controls and Procedures

The Company's chief executive officer and chief financial officer have evaluated the effectiveness of Belmond's disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) to ensure that the information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to Belmond management to allow timely decisions regarding required disclosure and to provide reasonable assurance that the information is recorded, processed, summarized and reported within the appropriate time periods. Based on that evaluation, Belmond management has concluded that these disclosure controls and procedures were effective as of December 31, 2016.

Management’s Annual Report on Internal Control over Financial Reporting

Belmond management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)).  Belmond's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.  Management assessed the effectiveness of Belmond's internal control over financial reporting as of December 31, 2016.  In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013).  Based on this assessment and those criteria, management has concluded that Belmond's internal control over financial reporting was effective as of December 31, 2016.

Deloitte LLP, Belmond's independent registered public accounting firm, issued the report below on the effectiveness of Belmond's internal control over financial reporting.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

Belmond Ltd.

Hamilton, Bermuda

We have audited the internal control over financial reporting of Belmond Ltd. and subsidiaries (the “Company”) as of December 31, 2016, based on criteria established in Internal Control—Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit 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 effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on the criteria established in Internal Control—Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule listed in the Index at Item 15 as of and for the year ended December 31, 2016 of the Company and our report dated February 28, 2017 expressed an unqualified opinion on those consolidated financial statements and financial statement schedule.

/s/ Deloitte LLP

London, England

February 28, 2017

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Changes in Internal Control over Financial Reporting

There have been no changes in Belmond’s internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f))during the fourth quarter of 2016 that have materially affected, or are reasonably likely to materially affect, Belmond’s internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met, such as prevention and detection of misstatements. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate, for example. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

ITEM 9B. Other Information

None.

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PART III

ITEM 10.       Directors, Executive Officers and Corporate Governance

Item 10 of Part III of Form 10-K requiresregistrants to furnish the information required by the following items of Regulations S-K, Part 400: Items 401 (Directors, Executive Officers, Promoters and Control Persons), 405 (Compliance with Section 16(a) of the Exchange Act), 406 (Code of Ethics) and 407(c)(3) (Material Changes to Procedures for Shareholder Nomination of Directors), (d)(4) (Names of audit committee members) and (d)(5) (Audit Committee Financial Expert). Because the Company is a "foreign private issuer" as defined by Rule 3b-4 under the Securities Exchange of 1934, as amended, it is not required to comply with Section 16(a) of the Exchange Act. Accordingly, the Company has not provided the information called for in Item 405.

Directors

The current directors of the Company are as follows:

Name, Age	Principal Occupation and Other Major Affiliations	Year First Became  Director
Harsha V. Agadi, 54	Chief Executive Officer and President of Crawford & Company (international insurance services firm) and Chairman and Chief Executive Officer of GHS Holdings, LLC (investing and restaurant consulting business)	2011
John D. Campbell, 74	Senior Counsel (retired) of Appleby (attorneys)	1994
Roland A. Hernandez, 59	Chairman of the Board of the Company, and Founding Principal and Chief Executive Officer of Hernandez Media Ventures (acquisition and management of media assets)	2013
Mitchell C. Hochberg, 64	President of Lightstone Group LLC (real estate investment and development firm)	2009
Ruth A. Kennedy, 52	Founder and Consultant of Kennedy Dundas Ltd. (brand and business consultancy)	2012
Ian Livingston, 52	Member of the U.K. House of Lords, Chairman Designate, Dixons Carphone plc, Chairman, Man Group plc	2015
Gail Rebuck, 65	Member of the U.K. House of Lords, Chair of Penguin Random House UK	2015
H. Roeland Vos, 59	President and Chief Executive Officer of the Company	2014

The principal occupation of each director is set forth in the table above supplemented by the following information.

Mr. Agadi was appointed Chief Executive Officer and President of Crawford & Company, an international insurance services firm listed on the New York Stock Exchange, in June 2016, after serving as its Interim Chief Executive Officer and Interim President since August 2015. Mr. Agadi is also Chairman and Chief Executive Officer of GHS Holdings, LLC, an investing and restaurant consulting business, a position he has held since 2000. From 2012 to 2014, Mr. Agadi was Executive Chairman of Quizno's Global LLC, a privately-owned group of mainly franchised restaurants in 40 countries with a strong brand recognition. Previously in 2010 to early 2012, he was Chairman and Chief Executive Officer of Friendly Ice Cream Corporation, a private company operating restaurants principally in the eastern United States. From 2004 to 2009, Mr. Agadi was President and Chief Executive of Church's Chicken Inc., another branded restaurant group in over 20 countries. From 2000 to 2004, he was an Industrial Partner of Ripplewood Holdings LLC, a private equity investment firm, and in the 1990s held executive positions with other branded restaurant groups. Mr. Agadi is on the Board of Visitors of the Fuqua Business School at Duke University.

Mr. Campbell was a member of the Appleby law firm in Bermuda until 1999 (where he served as Senior Partner from 1987 to 1999) and retired as Senior Counsel in 2003. Mr. Campbell retired as a non-executive director and Chairman of the Compensation Committee of Argus Group Holdings Ltd., a public company listed on the Bermuda Stock Exchange engaged principally in the insurance business, in September 2015 after 32 years service on the board. In 2012, Mr. Campbell retired after seven years as non-executive Chairman of the Board of HSBC Bank Bermuda Ltd. (formerly named The Bank of Bermuda Ltd.), a subsidiary of HSBC Holdings plc. Mr. Campbell served as a director for 25 years and as Chairman of the bank's Audit Committee for 20 years until 2008. Mr. Campbell retired as a director and the Chairman of the Nomination and Governance Committee of Bank of Bermuda Foundation, the largest charity in Bermuda, in November 2016 after serving as a director for 16 years.

Mr. Hernandez has been the Founding Principal and Chief Executive Officer of Hernandez Media Ventures since 2001. He

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previously served as Chief Executive Officer of Telemundo Group, Inc. from 1995 to 2000, and also Chairman from 1998 to 2000. He founded Interspan Communications and served as President from 1986 to 1994. He currently is a non-executive director of MGM Resorts International, Vail Resorts Inc., and U.S. Bancorp, all listed on the NYSE. At MGM Resorts and Vail Resorts, he is Lead Director on each board. He previously served on the board of Sony Corporation for five years to 2013, The Ryland Group Inc. for 12 years to 2012, and Wal-Mart Stores Inc. for ten years to 2008, all NYSE-listed companies. Mr. Hernandez has gained significant board committee experience at all of these listed companies. In addition, he is currently a member of the Board of Advisors of Harvard Law School and a member of the President’s Council on International Activities at Yale University. He was appointed Chairman of the Board of Belmond Ltd. in June 2013.

Mr. Hochberg was appointed President of Lightstone Group LLC in 2012, a privately-owned U.S.-based real estate company owning, developing and managing a diversified portfolio of commercial, industrial, multi-family residential, and hospitality properties. He was the Managing Principal of Madden Real Estate Ventures since March 2007. He was President and Chief Operating Officer of Ian Schrager Company, a developer and manager of innovative luxury hotels and residential projects in the United States, in 2006 and early 2007. Mr. Hochberg founded, and for 20 years through 2005, was the President and Chief Executive Officer of Spectrum Communities and its successor, developers of luxury home communities in the northeastern United States. Mr. Hochberg was the non-executive Chairman of Orleans Homebuilders Inc., a developer of single-family residences in seven U.S. states from 2011 to 2014. He is Chairman of the Board of Directors of WMC Health, a $1.6 billion, seven hospital, regional healthcare network. He is a lawyer and a certified public accountant.

Ms. Kennedy founded Kennedy Dundas in 2009, a brand and business consultancy advising clients in the luxury goods and services sectors to meet their business development objectives. From 2006 to 2009, she served as head of Quinlan Private UK, a Dublin-based real estate and private equity group managing commercial and residential properties in Europe including luxury hotels. Ms. Kennedy was responsible for opening offices in the United Kingdom and establishing the firm's private client business in Europe. For sixteen years prior to that position, Ms. Kennedy served as Managing Director responsible for business development as well as day-to-day operations with David Linley and Co., the bespoke furniture and design business in the U.K. Ms. Kennedy began her career at S.G. Warburg as an investment banker. Ms. Kennedy is a non-executive director of Bholdings Ltd, a private company providing various business services, David Linley Holdings and Value Retail plc, a private company specializing in the creation and operation of luxury shopping outlet destinations, and an executive director of Kennedy Dundas.

Lord Livingston is a member of the U.K. House of Lords after being made a life peer in 2013 and served as U.K. Minister of State for Trade and Investment from December 2013 to May 2015. Prior to this appointment, Lord Livingston held a number of executive positions with BT Group plc, one of the world's leading communications companies and a member of the FTSE 100, including Group Chief Executive Officer from 2008 to 2013, and served on the company's board of directors throughout his eleven-year tenure with the company. Prior to his time with BT Group, Lord Livingston held various leadership positions from 1991 to 2002, including Chief Financial Officer and executive director, with Dixons Group plc (now Dixons Carphone plc), one of the largest consumer electronics retailers in Europe. Lord Livingston currently serves as Chairman Designate of Dixons Carphone plc (Chairman from May 2017), as Chairman of Man Group plc, and as a non-executive director of Celtic plc. Lord Livingston is a member of the Institute of Chartered Accountants in England and Wales.

Baroness Rebuck has served as Chair of Penguin Random House UK from 2013 to date. From 1991 until 2013, she served as Chair and Chief Executive of Random House UK and its overseas subsidiaries. Baroness Rebuck was the co-founder and director of Century Publishing, which was launched in 1982 and which was acquired by Random House Inc. in 1989, at which time Baroness Rebuck became Chair of the Random House division. Baroness Rebuck is currently a member of the Global Board of Representatives of Penguin Random House, a member of the General Management Committee of Bertelsmann SE & Co. KGaA, and a non-executive director of Koovs plc and Guardian Media Group. Baroness Rebuck was a non-executive director of British Sky Broadcasting Group plc from 2002 until 2012. Baroness Rebuck chairs the Council of the Royal College of Art. Baroness Rebuck was awarded a DBE in 2009 and was appointed a life peer to the House of Lords in 2014.

Mr. Vos was appointed President and Chief Executive Officer of Belmond in September 2015. He was elected to the Belmond board of directors in June 2014. From 2001 to 2013, Mr. Vos served as President of the Europe, Africa and Middle East division of Starwood Hotels and Resorts Worldwide, Inc., and until mid-2015, he acted as an independent director on the board of Starwood EAME bvba. Mr. Vos served as the Vice Chairman of the Supervisory Board of Design Hotels AG, a hotel marketing company majority-owned by Starwood and listed on the Munich stock exchange, until July 2014. Mr. Vos joined ITT Sheraton, a predecessor of Starwood, in 1982 and held progressively senior hotel operating and management positions throughout his career, including President, Europe and Senior Vice President and Area Director, Italy and Malta, during which period he was an integral part of the introduction and expansion of the Luxury Collection. During his 12 years as President of Europe, Africa and Middle East, the division grew from 127 owned and managed properties in the region to 243 spread over 60 countries, with another 64 hotels and resorts in the development pipeline. In addition to serving on the board of Belmond, Mr. Vos is on the board of Albron B.V., a Dutch foundation that operates catering and restaurants in the Netherlands and Belgium and until December 2015, he was on the

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board of Joa Group Holding, a private company that operates 21 casinos in France.

Director Qualifications

When considering whether the directors have the experience, qualifications, attributes and skills, taken as a whole, to enable the Company’s board of directors to satisfy its oversight responsibilities effectively in light of Belmond’s business and structure, the board of directors considered each person’s background and experience outlined above.

In addition, the board of directors considered the particular experience and skills of each director as set out below:

Name	Experience and Skills
Harsha V. Agadi	The board of directors considered his experience as chief executive of various restaurant companies operating in many different countries. As chief executive, Mr. Agadi developed expertise in sales, marketing, operations, finance, strategy and development. Like Belmond, these companies under Mr. Agadi’s guidance relied on strong marketing and brand awareness.
John D. Campbell	The board of directors considered his work on other company boards and corporate governance experience, including his service as a director and chairman of several committees of Argus Group Holdings Ltd., a public company listed on the Bermuda Stock Exchange and his tenure as Chairman of the Board, a director and Chairman of the Audit Committee of HSBC Bank Bermuda, Ltd., as well as his leadership and operational and legal experience as a member of a global law firm.
Roland A. Hernandez	The board of directors considered his executive capabilities leading successful media and entertainment businesses and his experience as a non-executive director of several publicly traded companies in the U.S., including as lead director of two companies in the luxury hospitality business, and as a member of various audit, nominating, governance and other board committees.
Mitchell C. Hochberg	The board of directors considered his real estate industry and operational experience, including his service as an executive officer of a developer and manager of innovative luxury hotels and residential projects in the U.S. and as an executive officer of a diversified real estate portfolio company. Also relevant was his background in accounting and law.
Ruth A. Kennedy	The board of directors considered her experience as a consultant in the luxury goods and services sectors for clients seeking to develop and strengthen their individual brands. The board of directors also considered her experience in managing a luxury goods business and her work in finance.
Ian Livingston	The board of directors considered his executive and operational capabilities in successfully leading large publicly traded and consumer-focused companies, including as Chief Executive Officer of BT Group, and his many years of board and corporate governance experience as a director. Lord Livingston also brings financial experience to the board, including through his role as Chief Financial Officer at Dixons Group and BT Group and as a member of the Institute of Chartered Accountants in England and Wales. The board of directors also considered Lord Livingston's experience as a senior government minister responsible for trade promotion and investment and trade policy for the U.K.
Gail Rebuck	The board of directors considered her leadership experience at successful consumer-focused companies, including being a co-founder of a publishing company, and her years of board and corporate governance experience as a director of various publicly traded companies.
H. Roeland Vos	The board of directors considered his hotel industry and operational experience, including his background in deluxe hotel owning and operating companies, his experience in developing new hotels, his insight into many aspects of hotel design, and his understanding of international business, general management and corporate strategy, including his service as Vice Chairman of the Supervisory Board of a luxury hotel group.

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Executive Officers

The current executive officers of the Company are as follows:

Name, Age	Position
H. Roeland Vos, 59	President and Chief Executive Officer
Martin O’Grady, 53	Executive Vice President, Chief Financial Officer
Philippe Cassis, 54	Executive Vice President, Chief Operating Officer
Richard M. Levine, 55	Executive Vice President, Chief Legal Officer

The principal occupation of the current executive officers of the Company is shown in the table above supplemented by the following information, except with respect to Mr. Vos whose previous experience is described above regarding the Company’s directors.

Prior to becoming an officer of the Company in March 2008, Mr. O’Grady served as Chief Financial Officer of Orion Capital Managers LP, a European private equity real estate investment firm including hotels. From 1999 until 2005, he worked for Security Capital European Realty, where he served as Chief Financial Officer of Access Self Storage, a retail self-storage operator in the United Kingdom, France and Australia. From 1992 until 1998, Mr. O’Grady held a number of senior finance and accounting positions with Jardine Matheson Group, an Asian-based conglomerate, including Group Financial Controller of Mandarin Oriental Hotel Group from 1992 to 1995. Mr. O’Grady began his career with PricewaterhouseCoopers and is a Fellow of the Institute of Chartered Accountants in England and Wales.

Mr. Cassis joined the Company in October 2015 from Sun Resorts Ltd. where he served as Chief Executive Officer and a member of the company's board of directors from 2013. Mr. Cassis previously held senior leadership positions over a period of 28 years at Starwood Hotels & Resorts Worldwide, Inc. where, from 2012 to 2013, he served as Senior Vice President, Operations South America and Global Initiatives Latin America; from 2006 to 2012, he served as Senior Vice President and Regional Director Spain and Portugal; and from 2001 to 2006, he served as Senior Vice President and Regional Director Middle East & Africa.

Mr. Levine joined the Company in February 2012 after eight years with Kerzner International Holdings Ltd., a global resort development and management business operating primarily under the One&Only and Atlantis brands, where he served as Executive Vice President and General Counsel working in business development and restructuring while leading the legal, regulatory and compliance department. Previously he worked in the private equity investment business as General Counsel at Hellman & Friedman LLC (1998-2003) and Credit Suisse First Boston (1996-1998). Mr. Levine is a New York-licensed lawyer.

Corporate Governance

The board of directors of the Company has established corporate governance measures substantially in compliance with requirements of the NYSE. These include Corporate Governance Guidelines, Charters for each of the standing Audit Committee, Compensation Committee and Nominating and Governance Committee of the full board, and a Code of Conduct applying to all directors, officers and employees. Each of these documents is published on the Company’s website (belmond.com).

Because the Company is a foreign private issuer as defined in SEC rules, it is not required to comply with all NYSE corporate governance requirements as they apply to U.S. domestic companies listed on the NYSE. The Company’s corporate governance practices, however, do not differ in any significant way from those requirements, except that if the board of directors determines that a particular director has no material relationship with Belmond and is otherwise independent, the board may waive any of the NYSE independence requirements that are applicable to U.S. domestic companies. The Company’s corporate governance practices comply with applicable requirements of the SEC.

The Board of Directors met four times during 2016 and all of the directors attended those meetings.

The members of the Company’s Audit Committee are Messrs. Agadi, Campbell (chairman) and Hochberg, and Lord Livingston. The board has designated Mr. Hochberg and Lord Livingston as audit committee financial experts as defined by SEC rules. The members of the Compensation Committee are Messrs. Agadi (chairman) and Campbell, Ms. Kennedy and Baroness Rebuck. The members of the Nominating and Governance Committee are Ms. Kennedy (chair), Baroness Rebuck and Mr. Hochberg. See Item 13—Certain Relationships and Related Transactions, and Director Independence below.

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Regarding the independence of directors from Belmond and its management, the board has reviewed the materiality of any relationship that each of them has with Belmond either directly or indirectly through another organization, including the fees and other compensation described under “Non-Executive Director Fees” in Item 11—Executive Compensation. The criteria applied included the director independence requirements set forth in the Company’s Corporate Governance Guidelines, any managerial, familial, professional, commercial, compensatory or affiliated relationship between a director and the Company, a subsidiary or another director, the SEC's independence rules with respect to members of the Company’s Audit Committee as set forth in Rule 10A-3 under the Securities Exchange Act of 1934 as amended and the corresponding NYSE listing standard, and the NYSE's listing standards with respect to members of the Company's Compensation Committee and Nominating and Governance Committee.

Based on this review, the board has determined that Ms. Kennedy, Baroness Rebuck and Messrs. Agadi, Campbell, Hernandez, and Hochberg and Lord Livingston are "independent" directors under the rules and standards outlined above. The Company’s Corporate Governance Guidelines, as well as the charters of the Audit, Compensation and Nominating and Governance Committees, are available at Belmond’s website belmond.com.

In addition, the board has appointed Messrs. Agadi, Hochberg (chairman) and Vos, and Lord Livingston, as well as Martin O'Grady, who is Chief Financial Officer but not a director, as an Investment Committee to consider important finance and development matters in preparation of presentation of those matters to the full board for discussion.

The non-executive directors of the Company meet regularly without management present. Mr. Hernandez, Chairman, presides at these executive sessions of the board.

Interested persons may communicate directly with any of the Company’s directors by writing to him or her at the Company’s registered office address (Belmond Ltd., 22 Victoria Street, Hamilton HM 12, Bermuda).

ITEM 11. Executive Compensation

Because the Company is a foreign private issuer, it is responding to this Item 11 as permitted by Item 402(a)(1) of SEC Regulation S-K under the 1934 Act.

The following table shows the salary and bonus paid in cash during 2016 to Mr. Vos, and to all executive officers as a group, for services to Belmond during 2016:

Name of Individual or Group	Principal Capacities in Which Served	Cash Compensation
H. Roeland Vos	President, Chief Executive Officer and Director	$	1,042,000
All executive officers as a group (5 persons)(1)		$	4,006,000

(1) The group comprises the executive officers set forth in Part III, Item 10—Directors, Executive Officers and Corporate Governance—Executive Officers, and Mr. Maurizio Saccani, a former executive officer, whose resignation was previously disclosed.

Mr. Vos was appointed President and Chief Executive Officer in September 2015. In connection with Mr. Vos’ appointment, the Company entered into certain compensatory agreements with Mr. Vos, including a Service Agreement between a subsidiary of the Company and Mr. Vos (the "Service Agreement"), and a Severance Agreement between the Company and Mr. Vos (the "Severance Agreement"), each dated September 20, 2015.

The principal terms of the Service Agreement relating to Mr. Vos' compensation include the following:

• an annual base salary of £605,806, subject to annual increases as determined by the board of directors of the Company or its compensation committee;

• eligibility for an annual bonus at a target level of 100% of his annual base salary and a maximum level of 200% of his annual base salary, with a bonus of £161,290 in respect of 2015 subject to achievement of individual goals and objectives;

• a sign-on award of 75,000 deferred class A common shares, vesting annually in three tranches;

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• an equity grant for the stub period of 2015 for stock options granted over 96,165 class A common shares at an exercise price of $13.75 per share vesting pro rata annually in four tranches;

• participation at the executive level in future grants under the Company's long-term incentive plan during each financial year of the Company;

• participation in the pension scheme of the subsidiary of the Company with employer contributions made at a rate of 7% of salary of each month (rising to 8% in 2017) and employee contributions at a rate of 1% of salary each month;

• a severance payment in the event of termination of his employment without cause or his resignation for good reason in the amount of $2 million paid in equal monthly installments over an 18 month period plus health insurance for 18 months for Mr. Vos and his spouse under the existing plans or, if he is not eligible, reimbursement or payment in cash to obtain the equivalent coverage in both cases conditional on compliance with post-termination obligations;

• provision of a furnished apartment in London for the non-exclusive use of Mr. Vos which will be leased for not more than £7,500 per month; and

• reimbursement for reasonable commutation expenses for transportation between London and Brussels or Amsterdam.

The Service Agreement is a fixed-term agreement for an initial term of three years ending on December 31, 2018. Unless the Service Agreement is terminated before the expiry of the initial term (by either party serving on the other no less than three months' notice of termination to be served no later than September 30, 2018) the Service Agreement will automatically extend for a further two years until December 31, 2020. If the Service Agreement is extended, it will, upon expiry of the fixed term, automatically terminate without the need for notice.

Under the Service Agreement, Mr. Vos is subject to a 12-month non-competition and non-solicitation covenants.

The principal terms of the Severance Agreement provide that if the Company undergoes a change in control, and if Mr. Vos’ employment is terminated by the Company or its subsidiary without cause or if he resigns for good reason within one year following the change in control (or in anticipation of the change in control), then Mr. Vos will not receive any severance benefits under his Service Agreement but will instead be entitled to a severance payment under the Severance Agreement. Such payment shall be payable in cash and equal to (A) two times the sum of (x) Mr Vos’ applicable base salary; and (y) the most recent annual bonus payment made to Mr Vos less (B) any amount paid to Mr Vos in lieu of notice (or paid in respect of the remainder of any applicable fixed term at the time of such termination) shall be deducted from such amount.

The Company has also entered into indemnification and severance agreements with its other executive officers. The severance agreements entitle the officers to receive employment termination payments in certain circumstances constituting a change in control of the Company in an amount equal to two times each officer's annual compensation, and require the Company to pay the excise tax on the severance payments of the U.S. tax-paying officers. The forms of indemnification and severance agreements with these officers are filed as exhibits to this report.

Retirement Plans

Employees based in the United Kingdom, including officers, are eligible to participate in a defined contribution retirement plan established by a U.K. subsidiary of Belmond, under which the subsidiary contributes to individual accounts established by employees. The subsidiary currently contributes for the officer participants in this plan at the rate of up to ten percent of annual salary. Under the U.K. plan, the Belmond subsidiary contributed on behalf of participating officers a total of $74,471 during 2016. See Note 12 to the Financial Statements regarding retirement plans.

Certain U.S. subsidiaries of Belmond have adopted a 401(k) retirement plan that permits employees to contribute pre-tax amounts out of their compensation into individual tax-deferred accounts. The maximum contribution most employees could make was $18,000 in 2016. Belmond paid a total of $10,600 into the account of the officer based in the U.S. participating in this plan in 2016 as a partial matching payment under the plan in addition to his own contribution.

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Option Awards under 2000 and 2004 Stock Option Plans and 2009 Share Award and Incentive Plan

Options to purchase class A common shares of the Company at market value at the time of award have been granted to directors, officers and selected employees under the Company's 2000 and 2004 Stock Option Plans and 2009 Share Award and Incentive Plan. The Compensation Committee of the board of directors administers these plans. There are no options outstanding under the 2000 Plan and, following adoption of the 2009 Plan by shareholders at the 2009 annual general meeting of the Company, no further awards were made under the 2000 or 2004 Plans. The options awarded have substantially the same terms and expire ten years from date of grant. Prior to 2015, the options awarded generally became exercisable three years after the date of grant. Options awarded in 2015 will become exercisable with respect to 25% of the number of options awarded on each of the first four anniversaries of the date of grant. In certain circumstances constituting a change in control of the Company, outstanding options become immediately exercisable, and optionees may thereafter surrender their options instead of exercising them and receive directly from the Company in cash the difference between the option exercise price and the value of the underlying shares determined according to the plans.

During 2016, options to purchase an aggregate of 176,100 class A shares were granted under the 2009 Plan to the current executive officers of the Company at prices ranging from $9.64 to $12.75 per share. No options were exercised by the current executive officers during 2016 (options on a total of 39,546 shares were exercised by former executive officers). During 2016, no options were granted to the non-executive directors of the Company, and no options were exercised by any of the current non-executive directors.

At December 31, 2016, options under the 2004 and 2009 Plans to purchase an aggregate of 916,675 class A shares (of which 447,233 are exercisable within 60 days) were held by current executive officers and current directors at per share exercise prices ranging from $5.89 to $59.23 and expiring between 2017 and 2026. See Note 18 to the Financial Statements.

Share Awards under 2009 Share Award and Incentive Plan

Under the 2009 Share Award and Incentive Plan, directors, officers and selected employees have been awarded by the Compensation Committee amounts of class A common shares of the Company to be issued currently or on a deferred basis after the expiration of a vesting period. The committee may condition the vesting of deferred shares or restricted shares on achievement, in whole or in part, of specified performance criteria in the individual award such as earnings targets or other criteria. Shares may also be issued under the awards before the vesting period has expired if a change in control of the Company occurs or certain other early vesting events occur.

During 2016, awards of deferred shares were made under the 2009 Plan with performance criteria based on Belmond's cumulative EBITDA on up to 201,000 class A shares to the current executive officers of the Company, all vesting in 2019. Also during 2016, awards of restricted shares without performance criteria were made under the 2009 Plan on 142,715 class A shares to the current non-executive directors of the Company, vesting between 2017 and the director's retirement, and awards of restricted shares without performance criteria on 119,300 class A shares were made to current executive officers of the Company, vesting between 2017 and 2020. Finally during 2016 under past awards of deferred shares with and without performance criteria under the 2009 Plan, and past awards of restricted shares without performance criteria under the 2009 Plan, a total of 82,474 class A shares was issued to current executive officers, 132,923 class A shares to current non-executive directors, and 73,075 class A shares to former executive officers and directors who left the Company during the year.

At December 31, 2016, deferred share awards with and without performance criteria on a total of up to 428,600 class A shares were outstanding to current executive officers and current non-executive directors under the 2009 Plan vesting in 2017 to 2019, and restricted share awards without performance criteria on a total of 434,541 class A shares were outstanding to current executive and current non-executive directors vesting in 2017 and beyond. None of these awards are issuable within 60 days. See Note 18 to the Financial Statements.

Non-Executive Director Fees

In March 2014, at the recommendation of the Compensation Committee after analysis by its independent compensation consultants of director compensation at other hotel companies, the board of directors amended the compensation of the Company's non-executive directors with effect from July 1, 2014 in order to simplify the compensation and make it consistent with market practice. The changes (i) eliminated all board and committee per meeting attendance fees (which meeting attendance fees had been between $1,500 and $5,500 for each meeting of the board or committee attended); (ii) increased the annual board member annual retainer fee to $77,500 from $50,000; (iii) increased the annual Audit Committee member fee to $10,000 from $5,000 and the annual member fee of the Compensation Committee, Nominating and Governance Committee and Investment Committee to $7,500 from $2,500; (iv) eliminated payment of committee member fees to the committee chairmen while increasing the annual chairman fee

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for the Audit Committee to $35,000 from $25,000 and for each of the Compensation Committee, Nominating and Governance Committee and Investment Committee to $20,000 from $12,500; and (v) increased the annual award of class A common shares under the 2009 Share Award and Incentive Plan to $150,000 from $100,000.

As Chairman of the Board in 2016, Mr. Hernandez is paid a Chairman's fee at an annual rate of $500,000, $300,000 of which he elected in 2015 to be paid as cash compensation (payable in quarterly installments), and $200,000 in the form of restricted shares under the 2009 Plan.

Aggregate annual retainer and chairmen fees as described above amounted to $950,000 in 2016.

In addition, as noted above, the directors participate in the Company's 2009 Share Award and Incentive Plan.  Included in the awards summarized above are awards in 2016 to directors under the 2009 Plan of restricted shares on a total of 142,715 class A shares, including 35,678 restricted shares issued to Mr. Hernandez vesting in 2017 as part of his compensation as Chairman of the Board.

In March 2013, following a review of director discount policies of other hotel companies and with an objective of encouraging the Company’s directors to visit and experience the Company’s properties while avoiding displacement of revenue during periods of high occupancy, the board of directors adopted an amended director discount policy that applies to all of the non-executive directors and their direct family members, including the Chairman, during personal visits at Company properties. The policy allows a 75% discount on each property’s average room rates, except the first 14 room nights each year are without charge, and a 50% discount on list prices of food and beverages and other services at each property, other than third-party provided services. These discounts are not available during times when a property’s occupancy exceeds 90%. This director discount policy also applies for three years to any non-executive director after he or she retires from the board at age 75 or otherwise steps down from the board at an annual general meeting of the Company after at least five years of board service.

The Company has entered into a director indemnification agreement with each of its non-executive directors, the form of which is filed as an exhibit to this report.

See Item 13—Certain Relationships and Related Transactions regarding an agreement between Belmond and James B. Sherwood, a former director of the Company, relating to the Hotel Cipriani in Venice, Italy.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee of the Company's board of directors is composed of four non-executive directors, namely Messrs. Agadi and Campbell, Ms. Kennedy and Baroness Rebuck. As discussed above in Item 10—Directors, Executive Officers and Corporate Governance—Corporate Governance, all of these directors have been determined to be independent. No Compensation Committee member has served as an officer or employee of the Company in an executive capacity. No executive officer of the Company serves on the board of directors or compensation committee of another company that has an executive officer serving on the Company's board of directors or its Compensation Committee.

Information responding to Item 407(e)(5) of SEC Regulation S-K is omitted because the Company is a "foreign private issuer' as defined in SEC Rule 3b-4 under the 1934 Act.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Five Percent Shareholders

The following table contains information concerning the beneficial ownership of the Company's class A common shares and class B common shares by the only persons known to the Company to own beneficially more than 5% of the outstanding shares of either class of common shares.

Belmond Holdings 1 Ltd. (“Holdings”) listed in the table below is a subsidiary of the Company and owns only class B shares.  Under Bermuda law, the shares owned by Holdings are outstanding and may be voted. In a strategic transaction involving Belmond such as a takeover of the Company, this structure may assist in maximizing the value that the Company and its shareholders receive in the transaction. See “Risks of Investing in Class A Common Shares” in Item 1A—Risk Factors regarding a judgment of the Bermuda Supreme Court in 2010 upholding this class B share ownership and voting structure. Each class B share is convertible at any time into one class A share and, therefore, the shares listed as owned by Holdings represent class B shares and the class A shares into which those shares are convertible.

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Voting and dispositive power with respect to the class B shares owned by Holdings is exercised by its board of directors, who are Messrs. Campbell and Hochberg and two other persons who are not directors or officers of the Company. Each of these persons may be deemed to share beneficial ownership of the class B shares owned by Holdings for which he or she serves as a director, as well as the class A shares into which those class B shares are convertible, but is not shown in the table below.

Name and Address	No. of Class A and Class B Shares		Percent of Class A Shares(1)		Percent of Class B Shares
Belmond Holdings 1 Ltd. 22 Victoria Street Hamilton HM 12, Bermuda	18,044,478		15.1	%	100.0	%
Reuben Brothers Limited and Alexander Bushaev (2)     3 Mangrove Bay Road Sandy's Parish, Bermuda	12,458,018	(7)	12.2	%	—
BlackRock Inc. (3)     40 East 52nd Street New York, New York 10022	9,526,509	(7)	9.4	%	—
Dimensional Fund Advisors LP (4)     Palisades West, Building One 6300 Bee Cave Road Austin, Texas 78746	8,638,989	(7)	8.5	%	—
Capital Research Global Investors (5)     333 South Hope Street Los Angeles, California, 90071	7,822,000	(7)	7.7	%	—
The Vanguard Group (6)     100 Vanguard Boulevard Malvern, Pennsylvania 19355	5,789,559	(7)	5.7	%	—

_________________ 

(1) The percentage of class A shares shown is based on 101,804,959 class A shares outstanding on February 20, 2017, plus the class A shares issuable upon conversion of the class B shares beneficially owned by that person, if any.

(2) The information with respect to Reuben Brothers Limited (“Reuben Brothers”) and Alexander Bushaev relates only to class A shares and is derived from their joint Schedule 13G/A report filed with the SEC on January 23, 2017. The report states that (a) Reuben Brothers is a corporation and Mr. Bushaev is an individual, (b) Mr. Bushaev manages the investments of Reuben Brothers under contract, and (c) Reuben Brothers and Mr. Bushaev have shared voting and dispositive power with respect to 12,458,018 class A shares.    

(3) The information with respect to BlackRock Inc. (“BlackRock”) relates only to class A shares and is derived from its Schedule 13G/A report filed with the SEC on January 19, 2017. The report states that (a) BlackRock is a parent holding company, (b) certain subsidiaries of BlackRock may hold class A shares, and (c) BlackRock has sole voting power with respect to 9,323,515 class A shares and sole dispositive power with respect to 9,526,509 class A shares.

(4) The information with respect to Dimensional Fund Advisors LP (“Dimensional”) relates only to class A shares and is derived from its Schedule 13G/A report filed with the SEC on February 9, 2017. The report states that (a) Dimensional is a registered investment adviser, (b) Dimensional furnishes investment advice to four registered investment companies and serves as an investment manager to certain other commingled group trusts and separate accounts, in certain cases with subsidiaries of Dimensional as advisers or sub-advisers, and (c) Dimensional has sole voting power with respect to 8,417,821 class A shares and sole dispositive power with respect to 8,638,989 class A shares.

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(5) The information with respect to Capital Research Global Investors ("Capital Research") relates only to class A shares and is derived from its Schedule 13G report filed with the SEC on February 13, 2017. The report states that (a) Capital Research is a registered investment adviser and (b) Capital Research has sole voting and dispositive power with respect to 7,822,000 class A shares.

(6) The information with respect to The Vanguard Group (“Vanguard”) relates only to class A shares and is derived from its Schedule 13G/A report filed with the SEC on February 10, 2017. The report states that (a) Vanguard is a registered investment adviser and is reporting on behalf of itself and two wholly-owned subsidiaries, and (b) Vanguard has sole voting power with respect to 100,716 class A shares, sole dispositive power with respect to 7,060,724 class A shares, and shared dispositive power with respect to 110,188 class A shares.

(7) Class A shares only.

Directors and Executive Officers

The following table sets forth certain information concerning the beneficial ownership of class A common shares of the Company for (i) each current director of the Company, (ii) those executive officers who were executive officers of the Company during 2016, and (iii) all current directors and current executive officers of the Company as a group. 

The group total in the following table includes class A shares beneficially owned by directors and executive officers as well as (a) 446,183 class A shares covered by stock options held by them and exercisable within 60 days from February 28, 2017 under the Company’s 2004 Stock Option Plan and 2009 Share Award and Incentive Plan, (b) awards of deferred shares vesting within 60 days under the 2009 Plan covering 127,325 class A shares without performance criteria held by current directors and current executive officers, and (c) awards of restricted shares under the 2009 Plan covering 176,915 class A shares held by current directors and awards of restricted shares under the 2009 Plan covering 216,500 class A shares held by current executive officers. It does not include awards of deferred shares with performance criteria vesting within 60 days covering up to 50,300 class A shares held by current executive officers. The group total represents approximately 1.5% of outstanding class A shares.

As noted above, Messrs. Campbell and Hochberg may be deemed to share beneficial ownership of the class B shares held by Belmond Holdings 1 Ltd. because they are also directors of that subsidiary, but those shares are not included in the following table.

Name	No. of Class A Shares(1)(2)
Harsha V. Agadi	111,791
John D. Campbell	110,536
Philippe Cassis	39,615
Roland A. Hernandez	159,169
Mitchell C. Hochberg	214,822
Ruth A. Kennedy	61,541
Richard M. Levine	283,400
Ian Livingston	25,514
Martin O'Grady	270,010
Gail Rebuck	38,461
Maurizio Saccani	63,091
H. Roeland Vos	223,093
All current directors and current executive officers as a group (11 persons) including stock options and deferred shares vesting within 60 days and restricted shares	1,537,952

(1) Each person has sole voting and dispositive power with respect to his or her shares, except Mr. Agadi shares voting and dispositive power with respect to all of his shares and Mr. Campbell shares voting and dispositive power with respect to 11,000 shares.

(2) Includes restricted shares and deferred shares and shares subject to options as to which the individual has the right to acquire beneficial ownership within 60 days as follows:

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(i) Mr. Agadi, 4,300 deferred shares without performance criteria vested in June 2016, 20,300 restricted shares vested in June 2016, and 15,291 restricted shares vesting in June 2017;

(ii) Mr. Campbell, 4,300 deferred shares without performance criteria vested in June 2016, 20,300 restricted shares vested in June 2016, and 15,291 restricted shares vesting at the next annual meeting at which Mr. Campbell is not nominated for re-election, and 8,400 shares subject to vested options at exercise prices ranging from $5.89 to $59.23 or a weighted average of $38.74 per share;

(iii) Mr. Cassis, 31,400 restricted shares vesting over a period of four years from March 2016 and 8,215 shares subject to vested options at an exercise price of $8.98 or a weighted average of $8.98 per share;

(iv) Mr . Hernandez, 36,300 restricted shares vested in June 2016 and 50,969 restricted shares vesting in June 2017;

(v) Mr. Hochberg, 4,300 deferred shares without performance criteria vested in June 2016, 20,300 restricted shares vested in June 2016, and 15,291 restricted shares vesting in June 2017;

(vi) Ms. Kennedy, 4,300 deferred shares without performance criteria vested in June 2016, 8,300 restricted shares vested in June 2016, and 37,491 restricted shares vesting upon Ms. Kennedy's retirement from the board;

(vii) Mr. Levine, 17,575 deferred shares without performance criteria vested in March 2016, 14,575 deferred shares without performance criteria vesting in March 2017, 24,800 restricted shares vesting over a period of four years from March 2016, and 189,000 shares subject to vested options at exercise prices ranging from $8.42 to $14.51 or a weighted average of $10.67 per share;

(viii) Lord Livingston, 10,223 restricted shares vested in June 2016 and 15,291 restricted shares vesting in June 2017;

(ix) Mr. O'Grady, 35,600 deferred shares without performance criteria vested in March and August 2016, 9,200 deferred shares without performance criteria vesting in March 2017, 21,600 restricted shares vesting over a period of four years from March 2016, and 206,175 shares subject to vested options at exercise prices ranging from $8.06 to $51.90 or a weighted average of $11.17 per share;

(x) Baroness Rebuck, 27,291 restricted shares vesting upon Baroness Rebuck's retirement from the board;

(xi) Mr. Saccani, deferred and performance shares that accelerated upon Mr. Saccani's resignation on April 18, 2016; and

(xii) Mr. Vos, 10,200,12,000 and 75,000 restricted shares vesting in each of July 2017, June 2018, and between 2016 and 2018 respectively, 41,500 restricted shares vesting over a period of four years from March 2016, and 34,393 shares subject to vested options at exercise prices ranging from $8.98 to $13.75 or a weighted average of $12.31 per share.

The foregoing table excludes stock options to purchase an aggregate of 469,444 class A shares not exercisable within 60 days held by executive officers under the Company’s 2009 Share Award and Incentive Plan, and does not include currently unvested awards of deferred shares covering an aggregate of up to 354,525 class A shares not vesting within 60 days held by directors and executive officers under the 2009 Plan.

The board of directors of the Company adopted revised Corporate Governance Guidelines concerning class A share ownership by non-executive directors and executive management in 2014. The guidelines require each director in office on July 1, 2014 to own class A shares in an amount equivalent to three times the annual board equity compensation amount ($450,000 of class A common shares, being three times the current annual board equity compensation of $150,000 of class A common shares) within five years of July 1, 2014, with the shares owned to be valued at the higher of cost or current market value. Executive management is required to own an amount of class A common shares equal to a multiple of annual base salary within five years of March 1, 2015 as follows: the Chief Executive Officer is to own class A common shares equal to five times annual base salary; Executive Vice Presidents are to own class A common shares equal to three times annual base salary; and selected Senior Vice Presidents and Vice Presidents are to own one times annual base salary.

Voting Control of the Company; Changes in Control

The following table sets forth the voting power held by the beneficial owners of more than 5% of the outstanding class A or class B common shares of the Company that have provided share ownership information to the Company and all directors and executive officers as a group. The directors of the Company who are deemed to be beneficial owners solely because they are directors of Holdings are not listed individually but are included in the group.

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Name	No. of Class A Shares	No. of Class B Shares	Combined Voting Power
Holdings	—	18,044,478	63.9	%
Reuben Brothers Limited et al.	12,458,018	—	4.4	%
Blackrock Inc.	9,526,509	—	3.4	%
Dimensional Fund Advisors	8,638,989	—	3.1	%
Capital Research Global Investors	7,822,000	—	2.8	%
The Vanguard Group	5,789,559	—	2.1	%
All current directors and current executive officers as a group (11 persons) including stock options, deferred shares vesting within 60 days, and restricted shares as noted above	1,231,462	18,044,478	64.5	%

In general the holders of class A and B common shares of the Company vote together as a single class on most matters submitted to general meetings of shareholders, with holders of class B shares having one vote per share and holders of class A shares having one-tenth of a vote per share. Each class B share is convertible at any time into one class A share. In all other material respects, the class A and B shares are identical and are treated as a single class of common shares.

Holdings and the Company's directors and executive officers hold in total approximately 17% in number of the currently outstanding class A and class B shares having approximately 64% of the combined voting power of the outstanding common shares of the Company for most matters submitted to a vote of the Company's shareholders. Other shareholders, accordingly, hold approximately 83% in number of the outstanding common shares having approximately 36% of combined voting power in the Company.

Under Bermuda law, the class B shares owned by Holdings (representing approximately 64% of the combined voting power) are outstanding and may be voted by that subsidiary. The investment by Holdings in class B shares and the manner in which Holdings votes those shares are determined by the board of directors of Holdings (two of whom are also directors of the Company) consistently with the exercise by those directors of their fiduciary duties to the subsidiary. Holdings, therefore, has the ability to elect at least a majority of the members of the board of directors of the Company and to control the outcome of most matters submitted to a vote of the Company's shareholders.

With respect to a number of strategic matters which would tend to change control of the Company, its memorandum of association and bye-laws contain provisions that could make it more difficult for a third party to acquire Belmond without the consent of the Company's board of directors. These provisions include supermajority shareholder voting provisions for the removal of directors and for “business combination” transactions with beneficial owners of shares carrying 15% or more of the votes which may be cast at any general meeting of shareholders, and limitations on the voting rights of such 15% beneficial owners. Also, the Company's board of directors has the right under Bermuda law to issue preferred shares without shareholder approval, which could be done to dilute the share ownership of a potential hostile acquirer. Also, the rights to purchase series A junior participating preferred shares, one of which is attached to each class A and class B common share of the Company, may have anti-takeover effects. See Note 17(b) to the Financial Statements (Item 8 above). Although Belmond management believes these provisions provide the Company and its shareholders with the opportunity to receive appropriate value in a strategic transaction by requiring potential acquirers to negotiate with the Company's board of directors, these provisions apply even if the potential transaction may be considered beneficial by many shareholders.

Equity Compensation Plan Information

The following table summarizes information as of December 31, 2015 about the Company's outstanding equity compensation awards and shares of class A common stock reserved for future issuance under the Company's equity compensation plans.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)
Equity compensation plans approved by security holders (1)	3,904,614 (2)	$11.88(3)	4,976,744 (4)

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(1) The Company does not have equity compensation plans that are not approved by security holders.

(2) This number includes 66,350 class A common shares subject to outstanding stock option awards under the Company's 2004 Stock Option Plan, 2,644,489 class A common shares subject to outstanding stock option awards under the 2009 Share Award and Incentive Plan, 787,159 class A common shares subject to deferred share awards (with and without performance criteria) under the 2009 Plan, and 406,616 restricted class A common shares which are deemed beneficially owned by the participant but which have not vested and therefore remain subject to restrictions on transfer.

(3) Because there is no exercise price associated with the class A common deferred and restricted shares, these share awards are not included in the weighted-average price calculation presented in column (b).

(4) This number includes 121,500 class A common shares originally reserved for issuance under the Company's 2000 Stock Option Plan, 753,119 class A common shares originally reserved for issuance under the 2004 Stock Option Plan, and 183,765 class A common shares originally reserved for issuance under the 2007 Performance Share Plan.

ITEM 13.Certain Relationships and Related Transactions

Related Person Transactions

James B. Sherwood, a former director of the Company, owns a private residential apartment in the Hotel Cipriani in Venice, Italy, a hotel owned by a subsidiary of the Company. Belmond has granted Mr. Sherwood a right of first refusal to purchase the hotel in the event Belmond proposes to sell it. The purchase price would be the offered sale price in the case of a cash sale or the fair market value of the hotel, as determined by an independent valuer, in the case of a non-cash sale. Similarly, if Mr. Sherwood proposes to sell his apartment, he has granted Belmond a right of first refusal to purchase it at fair market value or, at Mr. Sherwood’s option in the case of a proposed cash sale, the offered sale price. In addition, the Company has granted an option to Mr. Sherwood to purchase the hotel at fair market value if a change in control of the Company occurs. Mr. Sherwood may elect to pay 80% of the purchase price if he exercises his right of first refusal, or 100% of the purchase price if he exercises his purchase option, by a non-recourse promissory note secured by the hotel payable in ten equal annual installments with interest at LIBOR. The rights and obligations of Mr. Sherwood are not assignable and expire one year after his death. These agreements relating to the Hotel Cipriani between Mr. Sherwood and Belmond and its predecessor companies have been in place since 1983 and were last amended and restated in 2005.

During 2016, the Company provided conference and banqueting services in the amount of $488,000 to Crawford & Co. and GHS Holdings, LLC, companies in which Mr. Harsha Agadi, who is a member of the board of directors of Belmond, is the Chief Executive Officer and President.

For a discussion of related party transactions as defined in U.S. GAAP, see Note 24 to the Financial Statements (Item 8 above).

The Audit Committee has the responsibility for the review and approval or ratification of transactions involving the Company and any of its affiliates, including but not limited to officers, directors, and/or their immediate family members, as well as investors who beneficially own more than five percent of any class of voting equity securities of the Company and/or their immediate family members (if the investor is a natural person).

ITEM 14. Principal Accounting Fees and Services

The following table presents the fees of Deloitte LLP, Belmond’s independent registered public accounting firm, for audit and permitted non-audit services in 2016 and 2015: 

	2016	2015
Year ended December 31,	$	$
Audit fees	2,549,000	2,428,000
Audit-related fees	144,000	237,000
Tax fees	368,000	361,000
All other fees	136,000	97,000
Total	3,197,000	3,123,000

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Audit services consist of work performed in connection with the audits of Belmond's financial statements and its internal control over financial reporting for each fiscal year and in the review of financial statements included in quarterly reports during the year, as well as work normally done by the independent auditor in connection with statutory and regulatory filings, such as statutory audits of non-U.S. subsidiaries, and consents and comfort letters for SEC registration statements.

Audit-related services consist of assurance and related services that are normally performed by the independent auditor and that are reasonably related to the audit or review of financial statements but are not reported under audit services, including due diligence reviews in potential transactions, specific procedures for lenders agreed in loan documents, and audits of benefit plans.

Tax services consist of all services performed by the independent auditor's tax personnel, except those services specifically related to the audit or review of financial statements, and include fees in the areas of tax return preparation and compliance and tax planning and advice.

Other services consist of those services permitted to be provided by the independent auditor but not included in the other three categories. There were no other services provided in 2016 and 2015.

The Audit Committee of the board of directors of the Company has established a policy to pre-approve all audit and permitted non-audit services provided by the independent auditor. Prior to engagement of the auditor for the next year's audit, management and the auditor submit to the Committee a description of the audit and permitted non-audit services expected to be provided during that year in each of four categories of services described above, together with a fee proposal for those services. Prior to the engagement of the independent auditor, the Audit Committee considers with management and the auditor and approves (or revises) both the description of audit and permitted non-audit services proposed and the budget for those services. If circumstances arise during the year when it becomes necessary to engage the independent auditor for additional services not contemplated in the original pre-approval, the Audit Committee at its regularly scheduled meetings requires separate pre-approval before engaging the independent auditor. To ensure prompt handling of unexpected matters, the Committee may delegate pre-approval authority to one or more of its members who report any pre-approval decisions to the Committee at its next scheduled meeting. For 2016 and 2015, all of the audit and permitted non-audit services described above were approved by the Audit Committee.

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PART IV

ITEM 15. Exhibits and Financial Statement Schedules

	Page Number
1. Financial Statements
Reports of independent registered public accounting firm	61
	117
Consolidated financial statements - years ended December 31, 2016, 2015 and 2014:
Balance sheets (December 31, 2016 and 2015)	62
Statements of operations	63
Statements of comprehensive income	65
Statements of cash flows	66
Statements of total equity	68
Notes to financial statements	69
2. Financial Statement Schedule
Schedule II — Valuation and qualifying accounts (years ended December 31, 2016, 2015 and 2014)	134
3. Exhibits
The index to exhibits appears on the pages immediately following the signature page to this report.

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BELMOND LTD. AND SUBSIDIARIES

Schedule II—Valuation and Qualifying Accounts

Column A	Column B	Column C				Column D			Column E
		Additions
	Balance at beginning of period	Charged to costs and expenses	Charged to other accounts			Deductions			Balance at end of period
Description	$	$	$			$			$
Year ended December 31, 2016
Allowance for doubtful accounts	291,000	109,000	19,000		(2)	1,000		(1)	420,000
Valuation allowance on deferred tax assets	69,928,000	4,876,000	(4,563,000	)	(3)	—			70,241,000
Year ended December 31, 2015
Allowance for doubtful accounts	425,000	92,000	(61,000	)	(2)	(165,000	)	(1)	291,000
Valuation allowance on deferred tax assets	91,462,000	16,320,000	(37,854,000	)	(3)	—			69,928,000
Year ended December 31, 2014
Allowance for doubtful accounts	563,000	47,000	(90,000	)	(2)	(95,000	)	(1)	425,000
Valuation allowance on deferred tax assets	110,780,000	4,573,000	(23,891,000	)	(3)	—			91,462,000
(1) Bad debts written off, net of recoveries.
(2) Foreign currency translation adjustments.
(3) This amount was charged to income tax expense, but is fully offset by the income tax benefit generated when recording the corresponding deferred tax asset.

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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:  February 28, 2017

BELMOND LTD.
By:	/s/ Martin O’Grady
	Martin O’Grady
	Executive Vice President, Chief Financial Officer

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Dated:  February 28, 2017

Name	Title
/s/ Harsha V. Agadi	Director
Harsha V. Agadi
/s/ John D. Campbell	Director
John D. Campbell
/s/ Roland A. Hernandez	Chairman and Director
Roland A. Hernandez
/s/ Mitchell C. Hochberg	Director
Mitchell C. Hochberg
/s/ Ruth A. Kennedy	Director
Ruth A. Kennedy
/s/ Ian Livingston	Director
Ian Livingston
/s/ Gail Rebuck	Director
Gail Rebuck
/s/ H. Roeland Vos	President, Chief Executive Officer and Director
H. Roeland Vos
/s/ Martin O’Grady	Executive Vice President, Chief Financial Officer (Chief Accounting Officer)
Martin O’Grady

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EXHIBIT INDEX

Exhibit No.	Incorporated by Reference to	Description
3.1	Exhibit 3.2 to the Current Report on Form 8-K dated July 2, 2014	Memorandum of Association and Certificate of Incorporation of Belmond Ltd.
3.2	Exhibit 3.2 to the Current Report on Form 8-K dated June 15, 2007	Bye-Laws of Belmond Ltd.
3.3	Exhibit 1 to Amendment No. 1 to the Registration Statement on Form 8-A dated April 23, 2007	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 the Current Report on Form 8-K dated December 10, 2007	Amendment No. 1 dated December 10, 2007 to Amended and Restated Rights Agreement
3.5	Exhibit 4.3 to the Current Report on Form 8-K dated May 27, 2010	Amendment No. 2 dated May 27, 2010 to Amended and Restated Rights Agreement
4.1	Exhibit 10.1 to the Current Report on Form 8-K dated March 27, 2014	Credit Agreement dated March 21, 2014 among Orient-Express Hotels Ltd., Belmond Interfin Ltd, Barclays Bank PLC, JPMorgan Chase Bank, N.A., and Credit Agricole Corporate and Investment Bank
4.2	Exhibit 10.1 to the Current Report on Form 8-K dated June 8, 2015	First Amendment to Credit Agreement dated June 2, 2015 among Belmond Ltd., Belmond Interfin Ltd., Barclays Bank PLC, JPMorgan Chase Bank, N.A., and Credit Agricole Corporate and Investment Bank
10.1	Exhibit 10.2 to the 2012 Form 10-K	Orient-Express Hotels Ltd. 2004 Stock Option Plan, as amended
10.2	Exhibit 10.3 to the Annual Report on Form 10-K for the year ended December 31, 2008	Orient-Express Hotels Ltd. 2007 Performance Share Plan, as amended
10.3	Exhibit 10.4 to the Annual Report on Form 10-K for the year ended December 31, 2009	Orient-Express Hotels Ltd. 2007 Stock Appreciation Rights Plan, as amended
10.4	Exhibit 10.5 to the 2012 Form 10-K	Orient-Express Hotels Ltd. 2009 Share Award and Incentive Plan, as amended
10.5	Exhibit 10.3 to the Annual Report on Form 10-K for the year ended December 31, 2004 (the "2004 Form 10-K")	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.
10.6	Exhibit 10.4 to the 2004 Form 10-K	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.
10.7	Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 (the "September 30, 2015 Form 10-Q)	Employment Agreement between Belmond (UK) Limited and H. Roeland Vos dated September 20, 2015
10.8	Exhibit 10.3 to the September 30, 2015 Form 10-Q	Letter Agreement between Belmond (UK) Ltd and H. Roeland Vos dated September 20, 2015
10.9	Exhibit 10.11 to the 2012 Form 10-K	Form of Severance Agreement between Belmond Ltd. and certain of its officers, as amended
10.10	Exhibit 10.12 to the 2012 Form 10-K	Form of Indemnification Agreement between Belmond Ltd. and its non-executive directors and certain of its officers
12		Statement of computation of ratios
21		Subsidiaries of Belmond Ltd.
23		Consent of Deloitte LLP relating to Form S-3 Registration Statement No. 333-215029 and Form S-8 Registration Statements No. 333-58298, No. 333-129152, No. 333-147448, No. 333-161459, No. 333-168588 and No. 333-183142
31		Rule 13a-14(a)/15d-14(a) Certifications
32		Section 1350 Certification

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Exhibit No.	Incorporated by Reference to	Description
99.1	Exhibit 99.1 to the Current Report on Form 8-K dated June 1, 2010	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

The Company hereby agrees to furnish to the Securities and Exchange Commission at its request copies of long-term debt instruments defining the rights of holders of outstanding long-term debt that are not required to be filed herewith.

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