Discontinued operations

At September 30, 2012, The Westcliff, Johannesburg, South Africa remained classified as held for sale. At December 31, 2011, Bora Bora Lagoon Resort, French Polynesia and Keswick Hall, Charlottesville, Virginia were classified as held for sale, and at June 30, 2012, The Observatory Hotel, Sydney, Australia was classified as held for sale along with The Westcliff. During the periods presented, The Observatory Hotel, Bora Bora Lagoon Resort and Keswick Hall were sold.

For the three and nine months ended September 30, 2012 and 2011, the results of operations of The Observatory Hotel, The Westcliff, Bora Bora Lagoon Resort and Keswick Hall have been presented as discontinued operations. In addition to these properties, discontinued operations for the three and nine months ended September 30, 2011 include the results of the operations of Hôtel de la Cité, Carcassonne, France, which was sold on August 1, 2011.

(a) Properties sold: The Observatory Hotel, Bora Bora Lagoon Resort, Keswick Hall and Hôtel de la Cité

On August 8, 2012, OEH completed the sale of the property and operations of The Observatory Hotel in Sydney, Australia for a consideration of A$40,000,000 ($42,106,000), of which A$29,350,000 ($30,895,000) was paid in cash and A$10,650,000 ($11,211,000) was settled directly with the lender to repay the debt facility secured by the property. The hotel was a part of OEH’s hotels and restaurants segment. The disposal resulted in a gain on sale of $5,367,000 (including a $12,147,000 transfer of foreign currency translation amounts from accumulated other comprehensive loss), which is reported within earnings from discontinued operations, net of tax.

On June 1, 2012, OEH completed the sale of the shares of Bora Bora Lagoon Resort in French Polynesia for a cash consideration of $3,000,000. The hotel was a part of OEH’s hotels and restaurants segment. The disposal resulted in a gain on sale of $690,000 (including a $13,074,000 transfer of foreign currency translation amounts from accumulated other comprehensive loss), which is reported within earnings from discontinued operations, net of tax.

On January 23, 2012, OEH completed the sale of the property and operations of Keswick Hall in Charlottesville, Virginia for consideration of $22,000,000, of which $12,000,000 was paid in cash and $10,000,000 was settled directly with the lender as a reduction in the debt facility secured by the property. The hotel was a part of OEH’s hotels and restaurants segment. The disposal resulted in a gain of $2,066,000, which is reported within earnings from discontinued operations, net of tax.

On August 1, 2011, OEH completed the sale of the shares of Hôtel de la Cité in Carcassonne, France, for a cash consideration of €9,000,000 ($12,933,000). The hotel was a part of OEH’s hotels and restaurants segment. The disposal resulted in a gain on sale of $2,182,000 (including a $3,018,000 transfer of foreign currency translation amounts from accumulated other comprehensive loss), which is reported within earnings from discontinued operations, net of tax.

The following is a summary of net assets sold and the gain recorded on sale for The Observatory Hotel, Bora Bora Lagoon Resort, Keswick Hall and Hôtel de la Cité:



	The Observatory Hotel		Bora Bora Lagoon Resort		Keswick Hall		Hôtel de la Cité
	August 8, 2012		June 1, 2012		January 23, 2012		August 1, 2011
	$'000		$'000		$'000		$'000
Property, plant and equipment, net	48,096		15,827		18,590		13,147
Net working capital (deficit)/surplus	(299	)	(720	)	401		266

Net assets	47,797		15,107		18,991		13,413
Transfer of foreign currency translation gain	(12,147	)	(13,074	)	—		(3,018	)

	35,650		2,033		18,991		10,395
Consideration:
Cash	30,895		3,000		12,000		12,933
Reduction in debt facility on sale of hotel	11,211		—		10,000		—
Less: Working capital adjustment	(447	)	—		(430	)	—
Less: Costs to sell	(642	)	(277	)	(513	)	(356	)

	41,017		2,723		21,057		12,577

Gain on sale	5,367		690		2,066		2,182

(b) Results of discontinued operations

On July 24, 2012, OEH entered into an agreement to sell The Westcliff hotel. The sale is expected to complete in the fourth quarter of 2012. OEH will continue to operate The Westcliff for a period of not more than 12 months after completion. OEH considers the hotel as non-core to the future business, with the sale releasing funds for debt reduction, cash reserves and reinvestment in other OEH properties. The hotel was included in the hotels and restaurants segment. This property has been reclassified as held for sale and its results have been presented as discontinued operations for all periods shown.

Summarized operating results of the properties classified as discontinued operations for the three and nine months ended September 30, 2012 and 2011 (including residual transactions relating to properties disposed of in prior periods which are recorded in “Other”) are as follows:



	Three months ended September 30, 2012
	The Observatory Hotel		The Westcliff	Bora Bora Lagoon Resort		Other		Total
	$’000		$’000	$’000		$’000		$’000
Revenue	1,204		2,404	—		(15	)	3,593

(Losses)/earnings before tax and gain/(loss) on sale	(406	)	192	(28	)	92		(150	)
Gain/(loss) on sale	5,367		—	(18	)	—		5,349

Earnings/(losses) before tax	4,961		192	(46	)	92		5,199
Tax benefit	426		—	—		—		426

Net earnings/(losses) from discontinued operations	5,387		192	(46	)	92		5,625



	Three months ended September 30, 2011
	The Observatory Hotel		The Westcliff		Bora Bora Lagoon Resort		Keswick Hall		Hôtel de la Cité		Other		Total
	$’000		$’000		$’000		$’000		$’000		$’000		$’000
Revenue	3,857		2,356		—		3,470		1,238		—		10,921

(Losses)/earnings before tax and gain on sale	(542	)	(183	)	(111	)	(51	)	193		(60	)	(754	)
Impairment	—		—		(2,150	)	(23,934	)	—		—		(26,084	)
Gain on sale	—		—		—		—		2,182		—		2,182

(Losses)/earnings before tax	(542	)	(183	)	(2,261	)	(23,985	)	2,375		(60	)	(24,656	)
Tax benefit/(provision)	—		—		—		7,001		(795	)	—		6,206

Net (losses)/earnings from discontinued operations	(542	)	(183	)	(2,261	)	(16,984	)	1,580		(60	)	(18,450	)



	Nine months ended September 30, 2012
	The Observatory Hotel		The Westcliff		Bora Bora Lagoon Resort		Keswick Hall		Total
	$’000		$’000		$’000		$’000		$’000
Revenue	9,188		6,929		—		412		16,529

Losses before tax and gain on sale	(1,034	)	(27	)	(166	)	(925	)	(2,152	)
Gain on sale	5,367		—		690		2,067		8,124

Earnings/(losses) before tax	4,333		(27	)	524		1,142		5,972
Tax benefit/(provision)	426		—		—		(405	)	21

Net earnings/(losses) from discontinued operations	4,759		(27	)	524		737		5,993



	Nine months ended September 30, 2011
	The Observatory Hotel		The Westcliff		Bora Bora Lagoon Resort		Keswick Hall		Hôtel de la Cité		Other		Total
	$’000		$’000		$’000		$’000		$’000		$’000		$’000
Revenue	12,207		6,988		—		10,764		3,782		—		33,741

Losses before tax and gain on sale	(838	)	(761	)	(286	)	(917	)	(303	)	(78	)	(3,183	)
Impairment	—		—		(2,150	)	(23,934	)	—		—		(26,084	)
Gain on sale	—		—		—		—		2,182		—		2,182

(Losses)/earnings before tax	(838	)	(761	)	(2,436	)	(24,851	)	1,879		(78	)	(27,085	)
Tax benefit/(provision)	—		—		—		7,001		(795	)	—		6,206

Net (losses)/earnings from discontinued operations	(838	)	(761	)	(2,436	)	(17,850	)	1,084		(78	)	(20,879	)

In the three and nine months ended September 30, 2011, OEH identified and recorded a non-cash property, plant and equipment charge of $23,934,000 in respect of Keswick Hall. The carrying value was written down to the hotel's fair value.

Also in the three and nine months ended September 30, 2011, OEH identified and recorded a non-cash property, plant and equipment charge of $2,150,000 in respect of Bora Bora Lagoon Resort. The carrying values of the assets were written down to the fair value to reflect the level of offers received at the time for the purchase of the hotel.

Assets and liabilities of the properties classified as held for sale consist of the following:



	September 30, 2012				December 31, 2011
	The Westcliff		Total		The Observatory Hotel		The Westcliff		Bora Bora Lagoon Resort		Keswick Hall		Total
	$’000		$’000		$’000		$’000		$’000		$’000		$’000
Current assets	87		87		373		87		45		3,260		3,765
Other assets	—		—		—		—		—		4,741		4,741
Property, plant and equipment	18,639		18,639		47,189		19,273		16,427		13,778		96,667

Total assets held for sale	18,726		18,726		47,562		19,360		16,472		21,779		105,173

Current liabilities	(266	)	(266	)	(1,212	)	(269	)	(843	)	(938	)	(3,262	)

Total liabilities held for sale	(266	)	(266	)	(1,212	)	(269	)	(843	)	(938	)	(3,262	)