The companys operating income was $73 million on $310 million in sales making it one of the more profitable divisions of the TataTwo expansion options seem promising. The first was Belmond Hotels (formerly Orient Express) whose North American properties included six (6) hotels and resorts it both owned and operated in South Carolina, Maryland, California, St. Martin, and Mexico. The second option is Salamander Hotels, Resorts, and Spas whose five (5) properties are located in Washington, DC,North Carolina, and Florida. Initial appraisals of the real estate of both companies indicated Belmond and Salamander were similarly valued on a room key (e.g., guest room) basis. Belmond has a total of 715 guest rooms while Salamander is larger at 1,378. Heather was also informedthat the strategic locations of both options were equally valued since Taj would continue to look for other companies to acquire to balance out its North American holdings. Gross Operating Profit per Available Room (GOPAR ) GOPAR considers the firms ability to generate revenue through room sales while at the same time keeping operating costs relatively low, all scaled by the number of rooms available. A higher ratio is preferred. Gross operating profit is calculated by subtracting the cost of sales from total revenues. Gross Operating Profit Margin Ratio Gross operating profit margin ratio also examines the ability of management to generate revenue while keeping operating costs relatively low, but in this case the ratio is scaled by total revenue. Gross operating profit margin ratio expresses the firms gross operating profit as a percentage of total revenue. While a higher ratio is preferred, care should be taken when evaluating this ratio between firms as differences in the mix of revenue sources can influence the ratio. Net Operating Income per Available Room As compared to gross operating profit, net operating income includes more costs and will therefore, by definition, be lower than gross operating profit. This ratio includes costs such as taxes and insurance, which are more difficult for management to directly control as compared to the costs captured by gross operating profit. However these costs are important to firm success and cannot be neglected. Again, a higher ratio is preferred. Net Operating Income Margin Ratio Net Operating Income Margin Ratio expresses operating income as a percent of total revenue. This ratio focuses on managements ability to generate profits from operations as a percentage of sales generated. When evaluating this ratio, typically, stakeholders preferred a higher ratio. Remember care should be taken when evaluating this ratio as differences in the mix of revenue sources between firms can influence the ratio. Net Profit Margin Ratio Net profit margin ratio provides a measure of managements overall ability to manage operations, as net profit includes all of the costs of operations. This ratio expresses net income as a percentage of the firms sales. When evaluating this ratio, typically, stakeholders preferred a higher ratio over a lower one. Return on Assets Return on assets is a measure of managements ability to utilize the firms assets to generate profit. This ratio is an overall measure as it is based on net income which includes all firm expenses, and disregards how the assets were financed (debt or equity). For return on assets a higher ratio is preferred. Return on Equity Return on equity expresses net income as a percentage of total stockholders (or owners) equity. When comparing this ratio between firms it is important to keep in mind the influence the financing choice of debt or equity will have on the ratio. This same distortion can also influence the ratio from period to period if the firm has made a dramatic change in financing, for example issuing a large amount of stock. The ratio can still be useful, but adjustments may need to be made to keep the ratio comparable. For return on equity a higher ratio is preferred. Operational Ratios Operational ratios are very useful in evaluating the operational performance of a firm, especially period over period. Management will often use these types of ratios to ensure day-to- day operations are being managed efficiently and effectively. Care should be taken when evaluating these ratios between firms as variations in the firms operational model can dramatically impact these ratios Total Revenue per Available Room Ratio (RevPAR) This ratio measures the total revenue yield per room available. This ratio is scaled by the number of rooms available so it is useful in comparisons between properties, but users must be aware that total revenue can be strongly influenced by the mix of services offered on a property by property basis. In general, a higher ratio is preferred. Financial Statements Presented below are the financial statements of Belmond Hotels and Salamander Hotels, Resorts, and Spas. This financial information should be used to conduct a ratio analysis of these two acquisition targets. The ratio analysis can be summarized and compared on the student worksheet below. Belmond Hotels balance sheet is presented in Exhibit 1 and Belmond Hotels statement of consolidated operations is presented in Exhibit 2. Salamander Hotels, Resorts, and Spas balance sheet is presented in Exhibit 3 and Salamander Hotels, Resorts, and Spas statement of consolidated operations is presented in Exhibit 4. Exhibit 5 is the student worksheet for ratio comparison.

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Exhibit 1 Belmond Hotels Consolidated Balance Sheets 2014 2013 Average* '000 '000 '000 Assets Cash and cash equivalents 172,940$ 163,159$ 168,050$ Restricted cash 1,914 6,003 3,959 Accounts receivable, net of allowances of $538 and $563 65,657 60,471 63,064 Due from unconsolidated companies 4,789 6,795 5,792 Prepaid expenses and Inventories 52,632 50,952 51,792 Assets of discontinued operations held for sale 720 34,416 17,568 Total current assets 298,652$ 321,796$ 310,224$ Property, plant and equipment, net of accumulated depreciation of $337,102 and $330,390 1,289,113 1,221,749 1,255,431 Investments in unconsolidated companies 258,676 251,255 254,966 Goodwill and other assets 226,696 293,216 259,956 Total assets 2,073,137$ 2,088,016$ 2,080,577$ Liabilities and Equity Working capital loans -$ 138$ 69$ Accounts payable 46,172 43,744 44,958 Accrued liabilities 36,585 34,187 35,386 Deferred revenue 43,388 36,983 40,186 Liabilities of discontinued operations held for sale - 1,611 806 Current portion of long-term debt 7,286 72,816 40,051 Total current liabilities 133,431$ 189,479$ 161,455$ Long-term debt and other obligations 634,367 566,915 600,641 Liability for pension benefit 890 1,606 1,248 Other liabilities 23,919 18,851 21,385 Deferred income taxes 162,458 172,370 167,414 Total liabilities 955,065$ 949,221$ 952,143$ Shareholders equity Class A common shares $0.01 par value (360,000,000 shares authorized): Issued 121,943,345 (2013 121,704,245) 1,219$ 1,217$ 1,218$ Additional paid-in capital 1,235,947 1,201,010 1,218,479 Retained earnings/(deficit) (7,213) 7,462 125 Accumulated other comprehensive loss (113,482) (73,317) (93,400) Total shareholders equity 1,116,471$ 1,136,372$ 1,126,422$ Non-controlling interests 1,601 2,423 2,012 Total equity 1,118,072$ 1,138,795$ 1,128,434$ Total liabilities and equity 2,073,137$ 2,088,016$ 2,080,577$ * - Using averages in ratio analysis will help to remove year-over-year volitiality from the analysis.

Belmond Hotels 2014 2013 Average* '000 '000 '000 Revenue 656,294$ 646,614$ 651,454$ Expenses: Cost of services 257,082 249,514 253,298 Selling, general and administrative 217,992 222,474 220,233 Depreciation and amortization 49,780 47,434 48,607 Impairment of property, plant and equipment - 71,360 35,680 Total operating costs and expenses 524,854$ 590,782$ 557,818$ Gain on disposal of property, plant and equipment 7,714 - 3,857 Earnings/(losses) from operations 139,154$ 55,832$ 97,493$ Loss on extinguishment of debt (29,012) - (14,506) Interest income 1,400 1,044 1,222 Interest expense (36,112) (31,194) (33,653) Foreign currency, net (1,760) 5,998 2,119 Earnings/(losses) before income taxes and earnings from unconsolidated companies, net of tax 73,670$ 31,680$ 52,675$ (Provision for)/benefit from income taxes (4,638) (2,516) (3,577) Earnings/(losses) before earnings from unconsolidated companies, net of tax 69,032$ 29,164$ 49,098$ Earnings from unconsolidated companies, net of tax provision/(benefit) of $1,170 and $(2,048) 2,076 5,266 3,671 Earnings/(losses) from continuing operations 71,108$ 34,430$ 52,769$ Net (losses)/earnings from discontinued operations, net of tax provision/(benefit) of $0 and $(592) (2,404) (800) (1,602) Net losses/(earnings) attributable to non-controlling interests 54 166 110 Net earnings/(losses) attributable to Belmond Ltd. 68,758$ 33,796$ 51,277$ * - Using averages in ratio analysis will help to remove year-over-year volitiality from the analysis. Statements of Consolidated Operations

Salamander Hotels, Resorts, and Spas Consolidated Balance Sheets 2014 2013 Average* '000 '000 '000 Assets Cash and cash equivalents 232,645$ 219,223$ 225,934$ Restricted cash 13,350 10,685 12,017 Accounts receivable, net of allowances of $538 and $563 51,150 53,138 52,144 Due from unconsolidated companies 13,131 12,995 13,063 Prepaid expenses 49,270 46,095 47,682 Inventories 77,837 80,200 79,018 Assets of discontinued operations held for sale - 11,260 5,630 Total current assets 437,381$ 433,597$ 435,489$ Property, plant and equipment, net of accumulated depreciation of $670,202 and $630,901 1,857,896 1,831,093 1,844,494 Investments in unconsolidated companies 113,442 112,854 113,148 Goodwill 261,802 279,310 270,556 Other intangible assets 24,563 25,191 24,877 Other assets 110,353 96,116 103,235 Total assets 2,805,437$ 2,778,161$ 2,791,799$ Liabilities and Equity Working capital loans 262$ 246$ 254$ Accounts payable 25,801 22,264 24,033 Accrued liabilities 84,024 82,053 83,038 Deferred revenue 75,929 67,830 71,879 Current portion of long-term debt 47,229 129,400 88,314 Total current liabilities 233,244$ 301,792$ 267,518$ Long-term debt and other obligations 653,558 605,522 629,540 Deferred income taxes 397,009 306,819 351,914 Total liabilities 1,283,811$ 1,214,133$ 1,248,972$ Shareholders equity Class A common shares $0.01 par value (300,000,000 shares authorized): Issued 213,283,450 (2013 216,565,895) 2,133 2,166 2,150 Additional paid-in capital 1,762,907 1,710,371 1,736,639 Retained earnings/(deficit) (12,306) 13,605 649 Accumulated other comprehensive loss (233,911) (166,426) (200,168) Total shareholders equity 1,518,824$ 1,559,716$ 1,539,270$ Non-controlling interests 2,802 4,313 3,557 Total equity 1,521,626$ 1,564,028$ 1,542,827$ Total liabilities and equity 2,805,437$ 2,778,161$ 2,791,799$ * - Using averages in ratio analysis will help to remove year-over-year volitiality from the analysis.

Salamander Hotels, Resorts, and Spas 2014 2013 Average* '000 '000 '000 Revenue 1,034,441$ 1,004,989$ 1,019,715$ Expenses: Cost of services 385,623 369,281 377,452 Selling, general and administrative 401,988 403,262 402,625 Depreciation and amortization 74,670 70,202 72,436 Impairment of property, plant and equipment 245 105,613 52,929 Total operating costs and expenses 862,526$ 948,357$ 905,442$ Gain on disposal of property, plant and equipment 11,571 450 6,011 Earnings/(losses) from operations 183,486$ 57,081$ 120,284$ Loss on extinguishment of debt (43,518) 1,842 (20,838) Interest income 2,100 1,545 1,823 Interest expense (54,168) (46,167) (50,168) Foreign currency, net (2,640) 8,877 3,119 Earnings/(losses) before income taxes and earnings from unconsolidated companies, net of tax 85,260$ 23,178$ 54,219$ (Provision for)/benefit from income taxes (6,957) (3,724) (5,340) Earnings/(losses) before earnings from unconsolidated companies, net of tax 78,303$ 19,455$ 48,879$ Earnings from unconsolidated companies, net of tax provision/(benefit) of $1,890 and $(2,618) 3,114 7,794 5,454 Earnings/(losses) from continuing operations 81,417$ 27,248$ 54,333$ Net (losses)/earnings from discontinued operations, net of tax provision/(benefit) of $0 and $192 (3,606) (1,184) (2,395) Net losses/(earnings) attributable to non-controlling interests 81 246 163 Net earnings/(losses) 77,892$ 26,310$ 52,101$ * - Using averages in ratio analysis will help to remove year-over-year volitiality from the analysis

Answer the following by Completing the student Worksheet below - Ratio Comparison - for Salamander Hotels, Resorts, and Spas.

Solvency=

Solvency Ratio=

Debt-Equity Ratio=

Liquidity=

Current Ratio=

Quick Ratio (Acid Test)=

Liquid Asset Ratio=

Asset Management=

A/R Turnover=

Avg. Collection Period=

Fixed Asset Turnover=

Total Asset Turnover=

Profitability=

GOPAR (subtract the cost of sales from total revenues)=

Gross Operating Profit Margin Ratio=

Net Operating Income per Available Room=

Net Operating Income Margin Ratio=

Net Profit Margin=

Return on Assets=

Return on Equity=

Operational=

Total Revenue per Available Room (RevPAR)=