Assets held for sale and discontinued operations

At December 31, 2013, The Inn at Perry Cabin, St Michaels, Maryland was classified as held for sale. In addition, one condominium unit at Porto Cupecoy, Sint Maarten was held for sale at December 31, 2013 as it was excluded from the disposal of the Porto Cupecoy development because it was already under a separate sales contract at the time. During the year ended December 31, 2013, Porto Cupecoy was sold, and the results of its operations have been presented as discontinued operations for the period. In addition, for the year ended December 31, 2013, the results of operations of Ubud Hanging Gardens, Bali, Indonesia have been presented as discontinued operations, following the unannounced dispossession of OEH from the hotel by the owner in November 2013.

At December 31, 2012, Porto Cupecoy was 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 Ubud Hanging Gardens, 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 were 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 Ubud Hanging Gardens, Porto Cupecoy, The Westcliff, The Observatory Hotel, Bora Bora Lagoon Resort, Keswick Hall and Hôtel de la Cité have been presented as discontinued operations.

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

On January 31, 2013, OEH completed the sale of the property and operations of Porto Cupecoy for cash consideration of $19,000,000. The property was a part of OEH’s former real estate segment. The disposal resulted in a gain of $439,000, which is reported within net earnings/(losses) from discontinued operations, net of tax.

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

On August 8, 2012, OEH completed the sale of the property and operations of The Observatory Hotel 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 Rest of world owned hotels 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 net earnings/(losses) from discontinued operations, net of tax.

On June 1, 2012, OEH completed the sale of the shares of Bora Bora Lagoon Resort for a cash consideration of $3,000,000. The hotel was a part of OEH’s Rest of world owned hotels 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 net earnings/(losses) from discontinued operations, net of tax.

On January 23, 2012, OEH completed the sale of the property and operations of Keswick Hall 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 North American owned hotels segment. The disposal resulted in a gain of $3,957,000, which is reported within net 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 for a cash consideration of €9,000,000 ($12,933,000). The hotel was a part of OEH’s European owned hotels 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 net earnings/(losses) from discontinued operations, net of tax.

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



	Porto Cupecoy		The Westcliff		The Observatory Hotel		Bora Bora Lagoon Resort		Keswick Hall		Hôtel de la Cité
	January 31, 2013		December 14, 2012		August 8, 2012		June 1, 2012		January 23, 2012		August 1, 2011
	$'000		$'000		$'000		$'000		$'000		$'000

Property, plant & equipment	38		17,911		48,096		15,827		18,590		13,147
Real estate assets	18,512		—		—		—		—		—
Net working capital (deficit)/surplus	—		(207	)	(299	)	(720	)	401		266
Other assets/(liabilities)	—		—		—		—		(1,891	)	—
Net assets	18,550		17,704		47,797		15,107		17,100		13,413
Transfer of foreign currency translation loss/(gain)	—		1,308		(12,147	)	(13,074	)	—		(3,018	)
	18,550		19,012		35,650		2,033		17,100		10,395
Consideration:
Cash	19,000		26,000		30,895		3,000		12,000		12,933
Reduction in debt facility on sale of hotel	—		—		11,211		—		10,000		—
Less: Working capital adjustment	(11	)	(628	)	(447	)	—		(430	)	—
Less: Costs to sell	—		(954	)	(650	)	(305	)	(513	)	(356	)
	18,989		24,418		41,009		2,695		21,057		12,577

Gain on sale	439		5,406		5,359		662		3,957		2,182

(b) Results of discontinued operations

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

Summarized results of the properties classified as discontinued operations for the years ended December 31, 2013, 2012 and 2011 (including residual transactions relating to properties disposed of in prior periods, which are recorded in “Other”) are as follows:



	Year ended December 31, 2013
	Ubud Hanging Gardens		Porto Cupecoy		The Westcliff	Keswick Hall	Total
	$'000		$'000		$'000	$'000	$'000

Revenue	5,124		1,932		—	—	7,056

Earnings/(losses) before tax, gain on sale and impairment	591		(3,228	)	—	—	(2,637	)
Impairment	(7,031	)	—		—	—	(7,031	)
Gain on sale	—		439		—	—	439

Earnings/(losses) before tax	(6,440	)	(2,789	)	—	—	(9,229	)
Tax (provision)/benefit	1,838		—		1,425	648	3,911

Net earnings/(losses) from discontinued operations	(4,602	)	(2,789	)	1,425	648	(5,318	)



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

Revenue	5,816		8,163		9,088		9,194		—		1,062		33,323

Earnings/(losses) before tax, gain on sale and impairment	1,757		(5,187	)	215		(1,080	)	(166	)	(1,601	)	(6,062	)
Impairment	—		(3,166	)	—		—		—		—		(3,166	)
Gain on sale	—		—		5,406		5,359		662		3,957		15,384

Earnings/(losses) before tax	1,757		(8,353	)	5,621		4,279		496		2,356		6,156
Tax (provision)/benefit	(336	)	—		(1,025	)	426		—		(683	)	(1,618	)

Net earnings/(losses) from discontinued operations	1,421		(8,353	)	4,596		4,705		496		1,673		4,538



	Year ended December 31, 2011
	Ubud Hanging Gardens		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		$'000

Revenue	5,381		7,871		9,523		16,429		—		15,359		3,743		—		58,306

Earnings/(losses) before tax, gain on sale and impairment	1,527		(6,169	)	(585	)	(726	)	(403	)	(1,330	)	(212	)	(11	)	(7,909	)
Impairment	—		(38,545	)	(515	)	—		(2,150	)	(23,934	)	—		—		(65,144	)
Gain on sale	—		—		—		—		—		—		2,182		—		2,182

Earnings/(losses) before tax	1,527		(44,714	)	(1,100	)	(726	)	(2,553	)	(25,264	)	1,970		(11	)	(70,871	)
Tax (provision)/benefit	(469	)	—		(87	)	—		—		4,506		(784	)	—		3,166

Net earnings/(losses) from discontinued operations	1,058		(44,714	)	(1,187	)	(726	)	(2,553	)	(20,758	)	1,186		(11	)	(67,705	)

The results of discontinued operations for the year ended December 31, 2013 include tax credits of $1,425,000 in relation to The Westcliff and $648,000 in relation to Keswick Hall, which were sold in December and January 2013, respectively. These tax credits arise following the submission of prior year tax returns in the current period.

As OEH is unable to operate Ubud Hanging Gardens for the foreseeable future, a non-cash impairment charge of $7,031,000 was identified and recorded in the year ended December 31, 2013. The carrying values of long-lived assets were written down to a fair value of $Nil.

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) in relation to Porto Cupecoy. The carrying values of the assets were written down to their fair value. Additionally, in the year ended December 31, 2011, OEH identified and recorded a non-cash property, plant and equipment impairment charge at the Porto Cupecoy development of $1,677,000.

The results of operations for Keswick Hall in the years ended December 31, 2012 and 2011 include revenue and costs relating to the sale of model homes in the Keswick Hall property development.

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 December 2013, OEH entered into an agreement to sell The Inn at Perry Cabin 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. OEH will continue to manage the hotel for the new owner after the sale has completed. The property has been reclassified as held for sale for all periods shown. Due to OEH's continuing involvement in managing the hotel, its results are presented within continuing operations.

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



	December 31, 2013					December 31, 2012
	The Inn at Perry Cabin		Porto Cupecoy	Total		The Inn at Perry Cabin		Porto Cupecoy		Total
	$’000		$’000	$'000		$’000		$’000		$'000

Current assets	1,503		—	1,503		1,473		—		1,473
Real estate assets	—		720	720		—		22,040		22,040
Property, plant and equipment, net	32,193		—	32,193		33,489		38		33,527

Total assets held for sale	33,696		720	34,416		34,962		22,078		57,040

Current liabilities	(1,611	)	—	(1,611	)	(1,363	)	(2,174	)	(3,537	)

Total liabilities held for sale	(1,611	)	—	(1,611	)	(1,363	)	(2,174	)	(3,537	)

Assets of Porto Cupecoy at December 31, 2013 relate to one condominium which was excluded from the disposal of the Porto Cupecoy development as it was already under a separate sales contract at the time.