Assets held for sale and discontinued operations

3 Months Ended

Mar. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Assets held for sale and discontinued operations

Assets held for sale and discontinued operations

At March 31, 2014, no properties were classified as held for sale, although there is one condominium relating to Porto Cupecoy which was excluded from the disposal of the Porto Cupecoy development in Sint Maarten as it was already under a separate sales contract at the time. During the three months endedMarch 31, 2014, Belmond The Inn at Perry Cabin, St Michaels, Maryland was sold. Due to OEH's continuing involvement in managing the hotel, its results are presented within continuing operations. For the three months endedMarch 31, 2014, 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.

During the three months endedMarch 31, 2013, Porto Cupecoy was sold. For the three months endedMarch 31, 2013, the results of operations of Porto Cupecoy have been presented as discontinued operations.

(a)    Properties sold: Belmond The Inn at Perry Cabin and Porto Cupecoy

On March 21, 2014, OEH completed the sale of the property and operations of Belmond The Inn at Perry Cabin for consideration of $39,700,000, of which $25,680,000 was paid in cash, $11,020,000 was settled directly with the lender to repay the debt facility secured by the property, and $3,000,000 was retained by the buyer as a key money contribution from OEH to be used for agreed capital enhancements. OEH will continue to manage the hotel for the new owner under a management agreement with a ten-year term that permits termination on the fifth anniversary of the agreement. The disposal resulted in a gain of $6,704,000, of which $3,704,000 was recognized on completion on March 21, 2014 and $3,000,000 has been deferred and will be recognized over the initial period of the management contract. The gain on sale of $3,704,000 is reported within gain on disposal of property, plant and equipment in the statements of condensed consolidated operations.

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.

The following is a summary of net assets sold and the gain recorded on sale for Belmond The Inn at Perry Cabin and Porto Cupecoy:

	Belmond The Inn at Perry Cabin		Porto Cupecoy
	March 21, 2014		January 31, 2013
	$'000		$'000
Property, plant and equipment	32,293		38
Real estate assets	—		18,512
Net working capital (deficit)/surplus	(820	)	—
Net assets	31,473		18,550
Transfer of foreign currency translation loss/(gain)	—		—
	31,473		18,550
Consideration:
Cash	25,680		19,000
Reduction in debt facility on sale of hotel	11,020		—
Key money retained by buyer	3,000		—
Less: Working capital adjustment	(1,130	)	(11	)
Less: Costs to sell	(393	)	—
	38,177		18,989
Gain on sale	6,704		439

(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 operating results of the properties classified as discontinued operations for the three months endedMarch 31, 2014 and 2013 are as follows:

	Three months ended March 31, 2014
	Ubud Hanging Gardens		Porto Cupecoy		Total
	$'000		$'000		$'000
Revenue	—		—		—
Losses before tax, gain on sale and impairment	(677	)	(58	)	(735	)
Impairment	—		—		—
Gain on sale	—		—		—
Losses before tax	(677	)	(58	)	(735	)
Tax benefit	—		—		—
Net (losses)/earnings from discontinued operations	(677	)	(58	)	(735	)

	Three months ended March 31, 2013
	Ubud Hanging Gardens		Porto Cupecoy		The Westcliff	Total
	$'000		$'000		$'000	$'000
Revenue	1,236		835		—	2,071
(Losses)/earnings before tax, gain on sale and impairment	129		(1,679	)	—	(1,550	)
Impairment	—		(77	)	—	(77	)
Gain on sale	—		439		—	439
(Losses)/earnings before tax	129		(1,317	)	—	(1,188	)
Tax benefit	(36	)	—		422	386
Net (losses)/earnings from discontinued operations	93		(1,317	)	422	(802	)

The results of discontinued operations for the three months endedMarch 31, 2014 include legal fees of $677,000 in relation to Ubud Hanging Gardens, as OEH is pursuing legal remedies following its wrongful dispossession by the owner in November 2013. See Note 16.

The results of discontinued operations for the three months endedMarch 31, 2013 include a tax credit of $422,000 in relation to The Westcliff, Johannesburg, South Africa, which was sold in December 2012. This tax credit arose following the submission of the 2012 tax return in 2013.

(c)    Assets and liabilities held for sale

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

	March 31, 2014	December 31, 2013
	Porto Cupecoy	Belmond The Inn at Perry Cabin		Porto Cupecoy	Total
	$’000	$'000		$’000	$'000
Current assets	—	1,503		—	1,503
Real estate assets	720	—		720	720
Property, plant and equipment	—	32,193		—	32,193
Total assets held for sale	720	33,696		720	34,416
Current liabilities	—	(1,611	)	—	(1,611	)
Total liabilities held for sale	—	(1,611	)	—	(1,611	)

Assets of Porto Cupecoy at March 31, 2014 comprise 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.