UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549











FORM 10-K/A


Amendment No. 1





(Mark One)





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


For the fiscal year ended December 31, 2014





ORoTRANSITION 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)





Bermuda98-0223493(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 className of each exchange on which registeredClass A Common Shares, $0.01 par value eachNew York Stock ExchangePreferred Share Purchase RightsNew 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




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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 FilerxAccelerated FileroNon-Accelerated FileroSmaller reporting companyo(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 27, 2014 (the last business day of the registrant’s second fiscal quarter in 2014) was approximately $1,206,000,000.


As of June 22, 2015 , 103,227,492 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) in Form 10-K filed February 27, 2015).





DOCUMENTS INCORPORATED BY REFERENCE: None
















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EXPLANATORY NOTE





Belmond Ltd. (the “registrant”) is filing this Amendment No. 1 (the “Amendment”) to its Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed with the U.S. Securities and Exchange Commission (“SEC”) on February 27, 2015 (the “Original Filing”).





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





Except as described above and to update the description and cross-reference to Exhibits 4.1 and 4.2 in the Exhibit Index, no other changes have been made to the Original Filing, and this Form 10-K/A does not amend, update or change any other items or disclosures in the Original Filing.  This Form 10-K/A does not reflect events occurring after the Original Filing and, other than providing the financial statements of the unconsolidated company named above under Item 15, does not modify or update the disclosures in the Original Filing in any way.
















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PART IV











ITEM 15.  Exhibits and Financial Statement Schedules











1. Financial Statements





(a) Perurail S.A.


Page NumberReport of independent registered public accounting firm2Financial statements - years ended December 31, 2014, 2013 and 2012:Balance sheets (December 31, 2014 and 2013)3Statements of operations4Statements of shareholders’ equity5Statements of cash flows6Notes to financial statements7





2. Financial Statement Schedule





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





3. Exhibits





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





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Report of Independent Registered Public Accounting Firm





Board of Directors and Shareholders


Perurail S.A.


Lima, Peru





We have audited the accompanying balance sheets of Perurail S.A. as of December 31, 2014 and 2013, and the related statements of operations, cash flows and shareholders’ equity for each of the three years in the period ended December 31, 2014. These financial statements are the responsibility of the Company ́s management. Our responsibility is to express an opinion on these financial statements based on our audits.





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





In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Perurail S.A. at December 31, 2014 and 2013, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.








Pazos, López de Romaña, Rodriguez S. Civil de R.L.Lima, PeruJune 23, 2015Countersigned by:/s/ Liliana Córdova MejíaLiliana Córdova MejíaCertified Chartered Public AccountantRegister No. 01-17661








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Perurail S.A.


Balance Sheets


20142013December 31,$’000$’000AssetsCash5,1953,748Accounts receivable, net of allowances of $Nil and $Nil3,4623,906Due from related parties18,82915,954Prepaid expenses2,8352,274Inventories9,2947,711Total current assets39,61533,593Property, plant and equipment, net of accumulated depreciation of $30,013 and $22,48854,75941,384Intangible assets, net of accumulated amortization of $390 and $356316300Other assets100100Total non-current assets55,17541,784Total assets94,79075,377Liabilities and Shareholders’ EquityWorking capital facilities4,7667,148Accounts payable5,3653,620Accrued liabilities8,4408,743Due to related parties3,9644,123Current portion of long-term debt21,2502,488Total current liabilities43,78526,122Long-term debt1,8402,088Deferred income tax liability, net6,1107,717Total long-term liabilities7,9509,805Total liabilities51,73535,927Commitments and contingenciesShareholders’ equity:Common shares S/1.00 par value (50,000,000 shares authorized) Issued - 50,000,000 (2013 - 20,000,000)16,9346,684Legal reserve1,4481,448Retained earnings24,67331,318Total shareholders’ equity43,05539,450Total liabilities and shareholders’ equity94,79075,377


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








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Perurail S.A.


Statements of Operations


201420132012Year ended December 31,$’000$’000$’000Revenue, net of discounts96,44892,78484,585Expenses:Cost of services(47,455)(48,056)(47,265)Depreciation and amortization(7,559)(6,102)(4,398)Selling, general and administrative(25,430)(19,828)(17,222)Impairment of property, plant and equipment and other assets——(894)Total operating costs and expenses(80,444)(73,986)(69,779)Gain on insurance settlement——90Gain on disposal of fixed assets——757——847Earnings from operations16,00418,79815,653Interest expense, net(848)(900)(740)Foreign currency, net(792)(440)233Net finance costs(1,640)(1,340)(507)Earnings before income tax14,36417,45815,146Income taxes(4,279)(4,665)(8,009)Net earnings10,08512,7937,137





No statement of comprehensive income is presented because Perurail S.A. has no items of other comprehensive income in any period presented.





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








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Perurail S.A.


Statements of Shareholders’ Equity


Common shares at par valueLegal reserveRetained  earnings$’000$’000$’000Balance, January 1, 20126,68482124,531Dividends——(5,308)Legal reserve—627(627)Net earnings——7,137Balance, December 31, 20126,6841,44825,733Dividends——(7,208)Net earnings——12,793Balance, December 31, 20136,6841,44831,318Dividends——(6,480)Stock split10,250—(10,250)Net earnings——10,085Balance, December 31, 201416,9341,44824,673





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








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Perurail S.A.


Statements of Cash Flows


201420132012Year ended December 31,$’000$’000$’000Cash flows from operating activities:Net earnings10,08512,7937,137Adjustment to reconcile net earnings to net cash provided by operating activities:Depreciation7,5256,0684,338Amortization343460Amortization of finance costs5—38Gain on disposal of fixed assets——(757)Impairment of  property, plant and equipment and other assets——893Change in deferred tax(1,607)(1,070)2,931Change in assets and liabilities:Decrease/(increase) in accounts receivable4449151,325Decrease/(increase) in inventories(1,583)623(1,393)(Decrease)/increase in due to related parties(159)(5,711)238Decrease/(increase) in prepaid expenses(566)1,466(2,508)(Decrease)/increase in accounts payable1,745(117)(470)(Decrease)/increase in accrued liabilities(303)(154)1,999Total adjustments5,5352,0546,694Net cash provided by operating activities15,62014,84713,831Cash flows from investing activities:Proceeds from disposal of fixed assets——757(Increase)/decrease in due from related parties(2,875)——Capital expenditures(20,949)(7,625)(6,488)Net cash used in investing activities(23,824)(7,625)(5,731)Cash flows from financing activities:Payment of dividends(6,480)(7,208)(5,308)Payments on working capital facilities(8,760)(8,691)(7,076)Proceeds from working capital facilities6,37711,6558,234Principal payments under long-term debt(2,315)(1,262)(3,012)Principal payments under capital lease(1,321)(1,961)(1,255)Proceeds from long-term debt22,000——Proceeds from capital lease150——Net cash provided by financing activities9,651(7,467)(8,417)Net (decrease) /increase in cash1,447(245)(317)Cash at beginning of year3,7483,9934,310Cash at end of year5,1953,7483,993





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








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Perurail S.A.


Notes to Financial Statements





1.   Summary of significant accounting policies and basis of presentation





(a)  Business





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





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





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





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





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





(b)   Basis for the presentation





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





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





(c)   Estimates





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





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





(d)   Foreign currency





The functional currency of the Company is the U.S. Dollar which is also the reporting currency of the Company. The local currency is the Nuevo Sol.





Foreign currency transaction gains and losses are recognized in earnings as they occur. Transactions in currencies other than the Company’s functional currency (“foreign currencies”) are recorded at the exchange rates prevailing on the dates of the transactions. All monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate 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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(e)   Cash





Cash includes all cash balances. The Company keeps its bank accounts in functional currency and local currency. Cash balances are freely disposable and accrue no interest.





(f)   Accounts receivable and allowance for doubtful accounts





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





(g)  Inventories





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





(h)   Income taxes





Current portion of income tax





The amount of income taxes paid or payable is determined by applying the provisions of the enacted tax law to the taxable income or excess deductions over revenues for the year. The rates used and regulations applied to compute the amount are those enacted as of the balance sheet date.





Deferred portion of income tax





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





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





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





Income tax positions must meet a more-likely-than-not threshold to be recognized in the financial statements. Management recognizes tax liabilities in accordance with ASC 740 guidance applicable to uncertain tax positions, and adjusts these liabilities when judgment changes as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which the actual tax liabilities are determined or the statute of limitations has expired.  The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the statements of operations. Liabilities for uncertain tax benefits are included in the balance sheets and classified as current or non-current liabilities depending on the expected timing of payment. At December 31, 2014 and 2013 the Company did not record any liabilities for uncertain tax positions.





(i)   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.


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


DescriptionUseful livesInstallations33 yearsMachinery and equipment10 yearsTransport units5 yearsImprovements to locomotive and rolling stock assets under lease5 yearsOwned locomotives and rolling stock5  yearsFurniture and fixtures10 yearsComputer equipment4 years





(j)   Intangible assets





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





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


DescriptionUseful livesLogo and trademarks30 yearsSoftware and licenses4 years





(k)   Impairment of long-lived assets





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





(l)   Capital leasing





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





(m)   Employees’ length of service compensation





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





(n)   Revenue recognition





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





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





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1.  The amount of revenues can be reliably quantified;





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





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





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




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





(o)   Deferred financing costs





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





(p)   Risks and uncertainties





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





Liquidity risk





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





Credit risk





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





Interest rate risk





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





Exchange risk





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





(q)   Employee profit sharing





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





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(r)   Recently issued and adopted accounting guidance





Accounting pronouncements adopted during the year





In July 2013, the FASB issued guidance on financial statement presentation of an uncertain tax benefit (“UTB”) when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The FASB’s objective in issuing this guidance is to eliminate diversity in practice resulting from a lack of guidance on this topic in current U.S. GAAP.  Under the ASU, an entity must present a UTB, or a portion of a UTB, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The ASU’s amendments are effective for public entities for fiscal years beginning after December 15, 2013, and interim periods within those years. The amendments should be applied to all UTBs that exist as of the effective date. Entities may choose to apply the amendments retrospectively to each prior reporting period presented. The adoption of this guidance did not have a material effect on the Company's financial position, results of operations and cash flows.





In March 2013, the FASB issued guidance which indicates that the entire amount of a cumulative translation adjustment (“CTA”) related to an entity’s investment in a foreign entity should be released when there has been any of the following:





•      Sale of a subsidiary or group of net assets within a foreign entity and the sale represents the substantially complete liquidation of the investment in the foreign entity.


•      Loss of a controlling financial interest in an investment in a foreign entity (i.e., the foreign entity is deconsolidated).


•      Step acquisition for a foreign entity (i.e., when an entity has changed from applying the equity method for an investment in a foreign entity to consolidating the foreign entity).





The ASU does not change the requirement to release a pro rata portion of the CTA of the foreign entity into earnings for a partial sale of an equity method investment in a foreign entity. This guidance is effective for fiscal years (and interim periods within those fiscal years) beginning on or after December 15, 2013. The guidance should be applied prospectively from the beginning of the fiscal year of adoption. The adoption of this guidance did not have a material effect on the Company's financial position, results of operations and cash flows.





In February 2013, the FASB issued guidance which requires entities to measure obligations resulting from joint-and-several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of (a) the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors, and (b) any additional amount the reporting entity expects to pay on behalf of its co-obligors. Required disclosures include a description of the joint-and-several arrangement and the total outstanding amount of the obligation for all joint parties. The guidance permits entities to aggregate disclosures (as opposed to providing separate disclosures for each joint-and-several obligation). These disclosure requirements are incremental to the existing related party disclosure requirements. The guidance is effective for all prior periods in fiscal years beginning on or after December 15, 2013 (and interim reporting periods within those years). The guidance should be applied retrospectively to obligations with joint-and-several liability existing at the beginning of an entity’s fiscal year of adoption. Entities that elect to use hindsight in measuring their obligations during the comparative periods must disclose that fact. The adoption of this guidance did not have a material effect on the Company's financial position, results of operations and cash flows.





Accounting pronouncements to be adopted





In April 2014, the FASB issued guidance that amends the definition of a discontinued operation and requires entities to provide additional disclosures about disposal transactions. The revised guidance will change how entities identify and disclose information about disposal transactions. The guidance is effective prospectively for all disposals (except disposals classified as held for sale before the adoption date) or components initially classified as held for sale in periods beginning on or after December 15, 2014, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on its financial statements.





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. The guidance is effective for the fiscal year beginning January 1, 2017. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.








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In August 2014, the FASB issued new guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial statements. Further, an entity must provide certain disclosures if there is “substantial doubt about the entity’s ability to continue as a going concern”. The guidance is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is assessing what impact, if any, the adoption of this guidance will have on its disclosures.





In February 2015, the FASB issued new guidance which amends consolidation requirements and changes the analysis required in relation to variable interest entities and whether or not these entities should be consolidated. The guidance is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on its financial statements.





In April 2015, the FASB issued new guidance which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. The standard does not affect the recognition and measurement of debt issuance costs, which would continue to be calculated using the interest method and be reported as interest expense. Additionally, the other areas of U.S. GAAP that prescribe the accounting treatment for third-party debt issuance costs will not be affected. The guidance is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted for financial statements that have not been previously issued. The new guidance will be applied on a retrospective basis when applicable. Debt issuance costs were $Nil at December 31, 2014 (2013 - $5,000).





2.  Property, plant and equipment





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


20142013December 31,$’000$’000Land861861Installations1,9091,806Machinery and equipment1,4641,447Transport units5,2195,219Improvements to locomotive and rolling stock assets under lease45,68139,091Owned locomotives and rolling stock5,2153,873Furniture and fixtures3,8894,379Works in progress20,5347,196Less: accumulated depreciation(30,013)(22,488)54,75941,384





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


20142013December 31,$’000$’000Transport units2,4842,334Locomotives and rolling stock3,5723,572Less: accumulated depreciation(690)(456)5,3665,450





The depreciation charge on property, plant and equipment for the year ended December 31, 2014 was $7,525,000 (2013 - $6,068,000; 2012 - $4,338,000).





No property, plant and equipment impairments were recorded in the years ended December 31, 2014 and 2013. In the year ended December 31, 2012, the Company identified a non-cash property, plant and equipment charge of $701,000 relating to the value of engines refurbished during the year.


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3.   Intangible assets





Intangible assets consist of the following as of December 31, 2014 and 2013:


Logo and trademarksSoftware and licensesTotal$’000$’000$’000Carrying amount:Balance at January 1, 2013122373495Additions—161—Transfers———Balance at December 31, 2013122534656Additions—5050Transfers———Balance at December 31, 2014122584706Accumulated amortization:Balance at January 1, 201350272322Charge for the period43034Balance at December 31, 201354302356Charge for the period43034Balance as at December 31, 201458332390Net book value:December 31, 201272101173December 31, 201368232300December 31, 201464252316





Amortization expense for the year ended December 31, 2014 was $34,000 (2013 - $34,000; 2012 - $60,000).





Estimated amortization expense for each of the years ended 2015 to 2019 is $34,000.





4.  Working capital facilities





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


20142013December 31,$’000$’000Working capital facilities4,7667,148





Bank loans accrue an annual average interest rate of 5.58% (2013 - 4.62%).





The Company had approximately $15,220,000 of working capital and overdraft lines of credit at December 31, 2014 (2013 - $9,150,000) issued by various financial institutions and having various expiration dates, of which $10,454,000 was undrawn (2013 - $2,002,000).





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5.   Accrued liabilities





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


20142013December 31,$’000$’000Current tax payable1911,187Other taxes188247Employees’ length of service compensation10287Vacation payable440657Remuneration and profit sharing payable2,0341,963Advance payments received from passengers927860Deferred revenue3,2022,965Provision for purchases and services1,297482Other accounts payable592958,4408,743





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





(a)  Long-term debt





Long-term debt consists of the following:


20142013December 31,$’000$’000Loans from banks collateralized by property, plant and equipment payable over a period of one year (2013 - one to two years), with a weighted average interest rate of 2.29% (2014 - 3.47%)20,000315Obligations under capital lease (see Note 6(b))3,0904,26123,0904,576Less: current portion21,2502,4881,8402,088





The Company is in compliance with all financial covenants in its long-term debt obligations at December 31, 2014 and 2013.





The Company's loan facilities are secured by a mortgage on the owned locomotives and transport units of the business.





During 2014 the Company drew two bridge loans totaling $20,000,000 and maturing in 2015. The first loan of $15,000,000 bears interest at a rate of 1.30% per annum, and the second loan of $5,000,000 bears interest at a rate of 5.25% per annum. In 2015, the loans will be refinanced with long-term facilities.





Deferred financing costs related to the above outstanding long-term debt of the Company were $Nil at December 31, 2014 (2013 - $5,000) and are amortized to interest expense over the term of the corresponding long-term debt.





The Company has guaranteed $11,279,000 of the long-term debt of Ferrocarril Transandino S.A. as at December 31, 2014 (2013 - $17,301,000). The guarantee exists as long as the debt of Ferrocarril Transandino S.A. remains outstanding, and can be called in the event of non-payment on due dates of an amount equal to or greater than $1,000,000. See Notes 1(a) and 13.





The following is a summary of the aggregate maturities of long-term debt of the Company excluding obligations under capital leases at December 31, 2014:


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Year ending December 31,$’000201520,00020,000





(b)   Obligations under capital leases





The following is a summary of future minimum lease payments under capital leases together with the present value of the minimum lease payments at December 31, 2014:


Year ending December 31,$’00020151,45320161,38720174522018362019—Minimum lease payments3,328Less: amount of interest contained in above payments(238)Present value of minimum lease payments3,090Less: current portion(1,250)1,840





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





(c)   Fair value of financial instruments





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





The estimated fair values of the Company’s debt as of December 31, 2014 and 2013 are as follows:


December 31, 2014December 31, 2013Carrying amountFair valueCarrying amountFair value$’000$’000$’000$’000Long-term debt, including current portion, excluding obligations under capital leases20,00020,000315318





(d)     Non-financial assets measured at fair value on a non-recurring basis





There were no non-financial assets measured at fair value on a non-recurring basis for the years ended December 31, 2014 and 2013.





The estimated fair value of the Company’s non-financial assets measured on a non-recurring basis at December 31, 2012 was as follows:


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Fair value measurements usingFair value at December 31, 2012 $’000Quoted prices in active markets for identical assets   (Level 1)   $’000Significant other observable inputs   (Level 2)   $’000Significant unobservable inputs   (Level 3)   $’000Total losses in the year ended December 31, 2012   $’000Property, plant and equipment————(701)Other assets————(193)





For the year ended December 31, 2012, the Company purchased new train engines and, as a consequence, property, plant and equipment with a carrying value of $701,000 for train engines replaced was written down to a fair value of $Nil, resulting in a non-cash impairment charge of $701,000. This impairment is included in earnings from continuing operations in the period incurred. See Note 2.





For the year ended December 31, 2012, deferred costs associated with a project no longer anticipated to be completed with a carrying value of $193,000 were written down to a fair value of $Nil, resulting in a non-cash impairment charge of $193,000. This impairment is included in earnings from continuing operations in the period incurred.





7.   Income taxes





The provision for income taxes consists of the following:


201420132012Year ended December 31,$’000$’000$’000Earnings before income tax14,36417,45815,146Current income tax charge(5,577)(5,735)(5,078)Deferred income tax credit/(charge)1,2981,070(2,931)Total(4,279)(4,665)(8,009)





The reconciliations of the Peru income tax rate to the Company’s effective income tax rate for the three years ended December 31, 2014. 2013 and 2012 are as follows:


201420132012Year ended December 31,%%%Peru income tax rate303030Prior year adjustments——17Permanent differences1125Other(11)(5)1Effective tax rate302753





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





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20142013December 31,$’000$’000Provisions included in books1,0701,668Other deferred income tax assets3411Deferred income tax assets1,1041,679Fixed assets and intangibles(6,903)(7,555)Exchange rate related to fixed assets(286)(1,328)Other deferred tax liabilities(25)(513)Deferred income tax liabilities(7,214)(9,396)Net deferred income tax liabilities(6,110)(7,717)





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





8.   Shareholders’ equity





(a)  Share capital and additional-paid in capital





In November 2014 the Company implemented a split of its common stock. Shareholders received 1.5 additional shares for every one share held. This increased the Company’s share capital to 50,000,000 fully subscribed and paid shares (2013 - 20,000,000) with a par value of S/1.00 each, all carrying the same rights.





The shareholders of the Company are as follows:


Number ofsharesPercentageownershipBelmond Ltd.25,000,00050.00Peruvian Trains & Railways S.A.25,000,00050.0050,000,000100.00





(b)   Legal reserve





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





For the year ended December 31, 2012, the Company increased its legal reserve by the amount of $627,000, which was set aside from earnings corresponding to the 2012 period.  Calculations of the legal reserve are based on locally prepared financial statements in accordance with “Ley General de Sociedades” in Peru.





(c)   Retained earnings





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





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9.   Employees’ profit sharing





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





10.   Information by segments





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





Financial information regarding the breakdown of revenues by type of product is as follows:


201420132012Year ended December 31,$’000$’000$’000Passenger transport75,67669,29259,951Freight and cargo transport17,22220,05021,059Other3,5503,4423,575Revenue96,44892,78484,585





Sociedad Minera Cerro Verde is a major customer to the Company, and in the year ended December 31, 2014 represented 10% (2013 - 13%; 2012 - 15%) of total revenue included within freight and cargo transport.





11.  Commitments and contingencies





Outstanding contracts to purchase property, plant and equipment were approximately $5,896,000 at December 31, 2014 (2013 - $Nil).





Rental expense for the year ended December 31, 2014 amounted to $538,000 (2013 - $565,000; 2012 - $468,000).





12.   Supplemental cash flow information


201420132012Year ended December 31,$’000$’000$’000Cash paid for:Interest149215378Income taxes6,8094,7814,654





The Company did not enter into any capital leases during the years ended December 31, 2014 and 2013. During the year ended December 31, 2012, the Company entered into capital lease obligations totaling $5,875,000, which is considered a non-cash investing and financing activity.





13.   Related party transactions





Accounts receivable include non-interest bearing loans extended to the Company’s shareholders. The amount due from shareholders to the Company at December 31, 2014 was $77,000 (2013 - $66,000).





Accounts receivable from Ferrocarril Transandino S.A. for working capital requirements at December 31, 2014 were $18,829,000 (2013 - $15,173,000). These receivables fluctuate as the Company utilizes the railway, locomotives and rolling stock, and stations and yards of Ferrocarril Transandino S.A.





Accounts receivable from Rail Asset S.A.C. for loans and working capital requirements at December 31, 2014 were $23,000 (2013 - $23,000).





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The amount due to Ferrocarril Transandino S.A. at December 31, 2014 was $221,000 (2013 - $280,000) and relates to the invoicing for the access and use of the railway, locomotives and rolling stock, stations and yards, and loans. These accounts accrue no interest. In 2014, the Company received services from Ferrocarril Transandino S.A. in the amount of $19,248,000 (2013 - $19,152,000; 2012 - $19,481,000), including the value added tax of 18% (2013 and 2012 - 18%).





The Company has guaranteed $11,279,000 of the long-term debt of Ferrocarril Transandino S.A. as at December 31, 2014 (2013 - $17,301,000). The guarantee exists as long as the debt of Ferrocarril Transandino S.A. remains outstanding, and can be called in the event of non-payment on due dates of an amount equal or greater than $1,000,000. See Notes 1(a) and 6.





The amount due to Belmond Peru S.A. at December 31, 2014 was $60,000 (2013 - $55,000) relating to expense reimbursements.





The amount due to Belmond Peru Management S.A. at December 31, 2014 was $3,302,000 (2013 - $2,419,000) relating to the invoicing of management fees and expense reimbursements established in the current management agreement.





The amount due to Belmond Hotel Holdings (UK) Ltd at December 31, 2014 was $42,000 (2013 - $40,000) relating to the invoicing of licence fees and marketing expenses.





The amount due to Peru Belmond Experiences S.A. at December 31, 2014 was $3,000 (2013 - $700,000) relating to the invoicing of working capital facilities.





The amount due to Peru Belmond Hotels S.A. at December 31, 2014 was $421,000 relating to on-board catering services (2013 - $533,000), which accrues no interest.





14.    Subsequent events





On June 7, 2015, the Company entered into a certain transportation services agreement (the “Transportation Agreement”) with Minera Las Bambas S.A., a company controlled by MMG Limited, a Hong Kong company listed on the Stock Exchange of Hong Kong Stock Limited and majority owned by China Minmetal Corporation, a Chinese State-owned enterprise (“MLB”). The Transportation Agreement provides for the copper concentrate to be produced by MLB at its Las Bambas mine to be transferred by the Company approximately 300 kilometers from a transfer station approximately 430 kilometers from the mine to the Port of Matarani on the Pacific coast of Peru. The Transportation Agreement has an initial term of fifteen (15) years that is expected to commence on January 1, 2016, subject to earlier termination by MLB after ten (10) years, with MLB having options to extend the Transportation Agreement for additional fifteen year terms. The Transportation Agreement contains customary terms for events of default, indemnities and related provisions.





MLB shall pay a fee under the Transportation Agreement consisting of a fixed component that reflects the Company’s fixed costs in delivering the transportation services and a variable component that is measured on the basis of price per ton of copper concentrate actually transported and unloaded. MLB is obligated to pay the fixed component at all times during the term of the Transportation Agreement, subject to a specified subset of force majeure and “Act of God” events when MLB would only pay, based on a formula, between 64% to 81% of the fixed component.





To ensure that the equipment was available in time for the commencement of production from the mine, MLB has entered into purchase contracts with independent third party manufacturers for the equipment necessary for the rail transportation, including locomotives, rail wagons, containers and turning equipment. The total cost for all such equipment is approximately $76 million. The Company will acquire all such equipment from MLB at its cost upon the closing of project financing secured solely by such equipment and related infrastructure used only for the services under the Transportation Agreement, but not any other assets of the Company. The Company will make this acquisition with 100% debt financing. If required by the project lenders, MLB will provide a bank letter of guarantee for an amount of $106.5 million for the benefit of the project. If the Company has not been able to obtain project financing by November 1, 2015, the Company will be deemed to have borrowed the amount of debt necessary to acquire the equipment from MLB, subject to a reduction in the monthly fee otherwise payable by MLB to the extent of deemed financing costs that shall be equal to what the Company’s actual financing costs would have been for the period from November 1, 2015 until the Company’s closing on project financing. Upon the closing on project financing, the Company will take title to all of the equipment previously acquired by MLB.





The Company will acquire assets of approximately $107 million, and these will be 100% financed by non-recourse debt, secured only by the assets and a guarantee from MMG Limited. This contract is expected to contribute a net loss to the Company of approximately $1.6 million in 2015 and net income of approximately $0.9 million in 2016 and $1.3 million in 2017.





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SIGNATURES





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





Dated: June 25, 2015








BELMOND LTD.By:/s/ Martin O'GradyMartin O’GradyExecutive Vice President, Chief Financial Officer











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EXHIBIT INDEX








Exhibit No.Incorporated by Reference toDescription3.1Exhibit 3.2 to June 15, 2011 Form 8-K/A Current Report (File No. 001-16017)Memorandum of Association and Certificate of Incorporation of Belmond Ltd.3.2Exhibit 3.2 to June 15, 2007 Form 8-K Current Report (File No. 001-16017)Bye-Laws of Belmond Ltd.3.3Exhibit 1 to April 23, 2007 Amendment No. 1 to Form 8-A Registration Statement(File No. 001-16017)Rights Agreement dated June 1, 2000, and amended and restated April 12, 2007, between Orient-Express Hotels Ltd. and Computershare Trust Company N.A., as Rights Agent3.4Exhibit 4.2 to December 10, 2007 Form 8-K Current Report (File No. 001-16017)Amendment No. 1 dated December 10, 2007 to Amended and Restated Rights Agreement (Exhibit 3.3)3.5Exhibit 4.3 to May 27, 2010 Form 8-K Current Report (File 001-16017)Amendment No. 2 dated May 27, 2010 to Amended and Restated Rights Agreement (Exhibit 3.3)4.1Exhibit 10.1 to March 27, 2014 Form 8-K Current Report (File No. 001-16017)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 Bank4.2Exhibit 10.1 to June 8, 2015 Form 8-K Current Report (File No. 001-16017)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





Belmond has no instrument with respect to long-term debt not listed above under which the total amount of securities authorized exceeds 10% of the total assets of Belmond on a consolidated basis.  The Company agrees to furnish to the Securities and Exchange Commission upon request a copy of each instrument with respect to long-term debt that is not required to be filed as an exhibit to this report.


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10.1Exhibit 10.1 to 2012 Form 10-K Annual Report (File No. 001-16017)Orient-Express Hotels Ltd. 2000 Stock Option Plan, as amended10.2Exhibit 10.2 to 2012 Form 10-K Annual Report (File No. 001-16017)Orient-Express Hotels Ltd. 2004 Stock Option Plan, as amended10.3Exhibit 10.3 to 2008 Form 10-K Annual Report (File No. 001-16017)Orient-Express Hotels Ltd. 2007 Performance Share Plan, as amended10.4Exhibit 10.4 to 2009 Form 10-K Annual Report (File 001-16017)Orient-Express Hotels Ltd. 2007 Stock Appreciation Rights Plan, as amended10.5Exhibit 10.5 to 2012 Form 10-K Annual Report (File No. 001-16017)Orient-Express Hotels Ltd. 2009 Share Award and Incentive Plan, as amended10.6Exhibit 10.3 to 2004 Form 10-K Annual Report (File No. 001-16017)Amended and Restated Agreement Regarding Hotel Cipriani Interests dated February 8, 2005 between James B. Sherwood, Hotel Cipriani S.r.l. and Orient-Express Hotels Ltd.10.7Exhibit 10.4 to 2004 Form 10-K Annual Report (File No. 001-16017)Amended and Restated Right of First Refusal and Option Agreement Regarding Indirectly Held Hotel Cipriani Interests dated February 8, 2005 between James B. Sherwood and Orient-Express Hotels Ltd.10.8Exhibit 10.8 to 2012 Form 10-K Annual Report (File No. 001-16017)Service Agreement between Orient-Express Services Ltd. andJohn M. Scott III dated November 8, 201210.9Exhibit 10.9 to 2012 Form 10-K Annual Report (File No. 001-16017)Severance Agreement between Orient-Express Hotels Ltd. andJohn M. Scott III dated November 8, 201210.10Exhibit 10.10 to 2012 Form 10-K Annual Report (File No. 001-16017)Indemnification Agreement between Orient-Express Hotels Ltd. and John M. Scott III dated November 8, 201210.11Exhibit 10.11 to 2012 Form 10-K Annual Report (File No. 001-16017)Form of Severance Agreement between Orient-Express Hotels Ltd. and certain of its officers, as amended10.12Exhibit 10.12 to 2012 Form 10-K Annual Report (File No. 001-16017)Form of Indemnification Agreement between Orient-Express Hotels  Ltd. and its non-executive directors and certain of its officers10.13Exhibit 10 to June 30, 2013 Form 10-Q Quarterly Report (File No. 001-16017)Services Agreement between Orient-Express Hotels Ltd. and J. Robert Lovejoy dated June 18, 201312Statement of computation of ratios*14Exhibit 14 to April 30, 2013 Form 8-K Current Report (File No. 001-16017)Code of Conduct as adopted April 30, 2013








* Previously Filed


Exhibit No.Incorporated by Reference toDescription21Subsidiaries of Belmond Ltd.*23.1Consent of Deloitte LLP relating to Form S-3 Registration Statement No. 333-188355 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*23.2Consent of Pazos, López de Romaña, Rodriguez S.C. relating to Form S-3 Registration Statement No. 333-188355 and Form S-8 Registration Statements No. 333-58298, No. 333-129152, No. 333-147448, No. 333-161459, No. 333-168588 and No. 333-18314231Rule 13a-14(a)/15d-14(a) Certifications32Section 1350 Certification99.1Exhibit 99.1 to June 1, 2010 Form 8-K Current Report (File No. 001-16017)Judgment of Bermuda Supreme Court dated June 1, 2010 in D.E. Shaw Oculus Portfolios LLC et al. vs. Orient-Express Hotels Ltd. et al.101Interactive data file*








* Previously Filed








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