Assets held for sale and discontinued operations

At December 31, 2012, Porto Cupecoy remained classified as held for sale. During the year ended December 31, 2012, The Westcliff, Johannesburg, South Africa; The Observatory Hotel, Sydney, Australia; Bora Bora Lagoon Resort, French Polynesia; and Keswick Hall, Charlottesville, Virginia were sold. For the year ended December 31, 2012 the results of operations of Porto Cupecoy, The Westcliff, The Observatory Hotel, Bora Bora Lagoon Resort, and Keswick Hall have been presented as discontinued operations.

At December 31, 2011, Keswick Hall and Bora Bora Lagoon Resort remained classified as held for sale. During the year ended December 31, 2011, Hôtel de la Cité, Carcassonne, France was sold. For the year ended December 31, 2011 the results of operations of Porto Cupecoy, The Westcliff, The Observatory Hotel, Bora Bora Lagoon Resort, Keswick Hall and Hôtel de la Cité have been presented as discontinued operations.

At December 31, 2010, Bora Lagoon Resort and Hôtel de la Cité remained classified as held for sale. During the year ended December 31, 2010, Lilianfels Blue Mountains, New South Wales, Australia and La Cabana restaurant, Buenos Aires, Argentina were sold. For the year ended December 31, 2010 the results of operations of Porto Cupecoy, The Westcliff, The Observatory Hotel, Bora Bora Lagoon Resort, Keswick Hall, Hôtel de la Cité, Lilianfels Blue Mountains and La Cabana have been presented as discontinued operations.

(a) Properties sold: The Westcliff, The Observatory Hotel, Bora Bora Lagoon Resort, Keswick Hall, Hôtel de la Cité, Lilianfels Blue Mountains and La Cabana

On December 14, 2012, OEH completed the sale of the property, operations and shares of The Westcliff in Johannesburg, South Africa for a consideration of $26,000,000. The hotel was a part of OEH’s hotels and restaurants segment. The disposal resulted in a gain on sale of $5,406,000, which is reported within earnings/(losses) from discontinued operations, net of tax. 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.

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 $5,359,000 (including a $12,147,000 transfer of foreign currency translation amounts from accumulated other comprehensive loss), which is reported within earnings/(losses) 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 $662,000 (including a $13,074,000 transfer of foreign currency translation amounts from accumulated other comprehensive loss), which is reported within earnings/(losses) 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 $3,957,000, which is reported within earnings/(losses) from discontinued operations, net of tax.

On August 1, 2011, OEH completed the sale of the property and operations 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/(losses) from discontinued operations, net of tax.

On May 25, 2010, OEH completed the sale of the restaurant La Cabana in Buenos Aires, Argentina for cash consideration of $2,712,000. The restaurant was a part of OEH’s hotels and restaurants segment. The disposal resulted in a loss on sale of $460,000 (including a $294,000 transfer of foreign currency gain from other comprehensive income) which is reported within earnings/(losses) from discontinued operations, net of tax. The assets of La Cabana were sold in December 2009 and the shares in the restaurant-owning company in May 2010.

On January 29, 2010, OEH completed the sale of the property and operations of Lilianfels Blue Mountains in Katoomba, Australia for a consideration of $18,667,000, of which $6,726,000 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 $7,183,000 (including a $7,292,000 transfer of foreign currency translation gain from other comprehensive income) which is reported within earnings/(losses) from discontinued operations, net of tax.

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



	The Westcliff		The Observatory Hotel		Bora Bora Lagoon Resort		Keswick Hall
	December 14, 2012		August 8, 2012		June 1, 2012		January 23, 2012
	$'000		$'000		$'000		$'000

Property, plant & equipment, net	17,911		48,096		15,827		18,590
Net working capital (deficit)/surplus	(207	)	(299	)	(720	)	401
Other assets/(liabilities)	—		—		—		(1,891	)
Deferred income taxes	—		—		—		—
Net assets	17,704		47,797		15,107		17,100
Transfer of foreign currency translation loss/(gain)	1,308		(12,147	)	(13,074	)	—
	19,012		35,650		2,033		17,100
Consideration:
Cash	26,000		30,895		3,000		12,000
Reduction in debt facility on sale of hotel	—		11,211		—		10,000
Less: Working capital adjustment	(628	)	(447	)	—		(430	)
Less: Costs to sell	(954	)	(650	)	(305	)	(513	)
	24,418		41,009		2,695		21,057

Gain/(loss) on sale	5,406		5,359		662		3,957



(continued)	Hôtel de la Cité		La Cabana		Lilianfels Blue Mountains
	August 1, 2011		May 25, 2010		January 29, 2010
	$'000		$'000		$'000

Property, plant & equipment, net	13,147		2,985		18,582
Net working capital (deficit)/surplus	266		170		66
Other assets/(liabilities)	—		43		158
Deferred income taxes	—		—		(730	)
Net assets	13,413		3,198		18,076
Transfer of foreign currency translation loss/(gain)	(3,018	)	(294	)	(7,292	)
	10,395		2,904		10,784
Consideration:
Cash	12,933		2,712		11,941
Reduction in debt facility on sale of hotel	—		—		6,726
Less: Working capital adjustment	—		—		—
Less: Costs to sell	(356	)	(268	)	(700	)
	12,577		2,444		17,967

Gain/(loss) on sale	2,182		(460	)	7,183

(b) Results of discontinued operations

In December 2012, OEH decided to sell Porto Cupecoy, its real estate development on the Dutch side of St. Martin, as an asset non-core to its future business, with the sale releasing funds for debt reduction, cash reserves and reinvestment in other OEH properties. The property development was included in the real estate segment. The property development has been reclassified as held for sale and its results have been presented as discontinued operations for all periods shown. The sale was completed in January 2013.

Summarized operating results of the properties classified as discontinued operations for the years ended December 31, 2012, 2011 and 2010 (including residual transactions relating to properties disposed of in prior periods which are recorded in “Other”) are as follows:



	Year ended December 31, 2012
	Porto Cupecoy		The Westcliff		The Observatory Hotel		Bora Bora Lagoon Resort		Keswick Hall		Total
	$'000		$'000		$'000		$'000		$'000		$'000

Revenue	8,163		9,088		9,194		—		412		26,857

Earnings/(losses) before tax, gain on sale and impairment	(5,187	)	215		(1,080	)	(166	)	(989	)	(7,207	)
Impairment	(3,166	)	—		—		—		—		(3,166	)
Gain on sale	—		5,406		5,359		662		3,957		15,384

Earnings/(losses) before tax	(8,353	)	5,621		4,279		496		2,968		5,011
Tax (provision)/benefit	—		(1,025	)	426		—		(683	)	(1,282	)

Net earnings/(losses) from discontinued operations	(8,353	)	4,596		4,705		496		2,285		3,729



	Year ended December 31, 2011
	Porto Cupecoy		The Westcliff		The Observatory Hotel		Bora Bora Lagoon Resort		Keswick Hall		Hôtel de la Cité		Other		Total
	$'000		$'000		$'000		$'000		$'000		$'000		$'000		$'000

Revenue	7,871		9,523		16,429		—		15,359		3,743		—		52,925

Losses before tax, gain on sale and impairment	(6,169	)	(585	)	(726	)	(403	)	(1,330	)	(212	)	(11	)	(9,436	)
Impairment	(38,545	)	(515	)	—		(2,150	)	(23,934	)	—		—		(65,144	)
Gain on sale	—		—		—		—		—		2,182		—		2,182

Earnings/(losses) before tax	(44,714	)	(1,100	)	(726	)	(2,553	)	(25,264	)	1,970		(11	)	(72,398	)
Tax (provision)/benefit	—		(87	)	—		—		4,506		(784	)	—		3,635

Net earnings/(losses) from discontinued operations	(44,714	)	(1,187	)	(726	)	(2,553	)	(20,758	)	1,186		(11	)	(68,763	)



	Year ended December 31, 2010
	Porto Cupecoy		The Westcliff		The Observatory Hotel		Bora Bora Lagoon Resort		Keswick Hall
	$'000		$'000		$'000		$'000		$'000

Revenue	64,019		13,257		14,271		179		11,185

Earnings/(losses) before tax, gain on sale and impairment	(3,355	)	3,015		(859	)	(137	)	(2,152	)
(Impairment)/reversal of previous impairment	(24,616	)	—		—		1,305		(1,600	)
Gain/(loss) on sale	—		—		—		—		—

Earnings/(losses) before tax	(27,971	)	3,015		(859	)	1,168		(3,752	)
Tax (provision)/benefit	266		(87	)	(6,653	)	—		(96	)

Net earnings/(losses) from discontinued operations	(27,705	)	2,928		(7,512	)	1,168		(3,848	)



(continued)	Year ended December 31, 2010
	Hôtel de la Cité		Lilianfels Blue Mountains		La Cabana		Other		Total
	$'000		$'000		$'000		$'000		$'000

Revenue	6,165		856		—		(19	)	109,913

Earnings/(losses) before tax, gain on sale and impairment	(197	)	(132	)	—		(1,419	)	(5,236	)
(Impairment)/reversal of previous impairment	(5,989	)	—		—		—		(30,900	)
Gain/(loss) on sale	—		7,183		(460	)	—		6,723

Earnings/(losses) before tax	(6,186	)	7,051		(460	)	(1,419	)	(29,413	)
Tax (provision)/benefit	1,684		—		—		—		(4,886	)

Net earnings/(losses) from discontinued operations	(4,502	)	7,051		(460	)	(1,419	)	(34,299	)

Assets of Porto Cupecoy include condominiums and marina slips remaining to be sold. In the year ended December 31, 2012, OEH identified and recorded a non-cash real estate assets impairment charge of $3,166,000 (2011 - $36,868,000; 2010 - $24,616,000). See Note 6. Additionally as part of the overall impairment calculation for the year ended December 31, 2011, property, plant and equipment at the Porto Cupecoy development with a carrying value of $1,677,000 was written down to a fair value of $Nil.

Revenue from the Keswick Hall property development in 2011 included the sales of two model homes for $1,876,000 and $1,250,000 in the first and fourth quarters of the year, respectively. These sales resulted in a loss on disposal of $16,000 in the year ended December 31, 2011. In the year ended December 31, 2010, OEH recorded a non-cash impairment charge of $1,600,000 against the carrying value of the two model homes. This charge resulted primarily from offers on one of the model homes that did not exceed the carrying value of those assets.

Also in the year ended December 31, 2011, OEH identified and recorded non-cash property, plant and equipment impairment charges of $23,934,000 in respect of Keswick Hall and $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 each hotel.

In the year ended December 31, 2011, OEH identified a non-cash goodwill impairment of $515,000 at The Westcliff. Management’s estimates at the time considered future profitability of the business, future growth rates and the related discount rates. OEH determined this impairment was triggered due to performance that required a reassessment.

In the year ended December 31, 2010, OEH identified and recorded a non-cash property, plant and equipment impairment charge of $5,989,000 in respect of Hôtel de la Cité. 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:



	December 31, 2012		December 31, 2011
	Porto Cupecoy		Porto Cupecoy		The Westcliff		The Observatory Hotel		Bora Bora Lagoon Resort		Keswick Hall		Total
	$’000		$’000		$’000		$’000		$’000		$’000		$’000

Current assets	—		—		87		373		45		3,260		3,765
Real estate assets	22,040		30,155		—		—		—		4,741		34,896
Property, plant and equipment, net	38		62		19,273		47,189		16,427		13,778		96,729

Total assets held for sale	22,078		30,217		19,360		47,562		16,472		21,779		135,390

Current liabilities	(2,174	)	(3,756	)	(269	)	(1,212	)	(843	)	(938	)	(7,018	)

Total liabilities held for sale	(2,174	)	(3,756	)	(269	)	(1,212	)	(843	)	(938	)	(7,018	)