Assets held for sale and discontinued operations

12 Months Ended

Dec. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

Assets held for sale and discontinued operations

Assets held for sale and discontinued operations

At December 31, 2016 and 2015, no assets and liabilities were classified as held for sale.

For the years ended December 31, 2016, 2015 and 2014, the results of operations of Ubud Hanging Gardens, Bali, Indonesia and the Porto Cupecoy development on the Dutch side of St Martin, French West Indies have been presented as discontinued operations.

During the year ended December 31, 2016, a sale was completed on the property, plant and equipment relating to the trains and carriages that were formerly operated as the Great South Pacific Express in Queensland, Australia. During the year ended December 31, 2014, a sale was completed on one condominium relating to Porto Cupecoy on the Dutch side of St Martin. Also, during the year ended December 31, 2014, Inn at Perry Cabin by Belmond, St Michaels, Maryland was sold. Due to Belmond's continuing involvement in managing the hotel, its results are presented within continuing operations.

(a)    Properties sold: Inn at Perry Cabin by Belmond and Great South Pacific Express

On the April 19, 2016, Belmond completed the sale of the property, plant and equipment relating to the trains and carriages that were formerly operated as the Great South Pacific Express in Queensland, Australia for consideration of $2,362,400 to the Company’s PeruRail joint venture. The carriages were sold at their carrying value and no gain or loss arose on disposal.

On March 21, 2014, Belmond completed the sale of the property and operations of Inn at Perry Cabin by Belmond 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. In addition, $3,000,000 was a key money contribution from Belmond to the buyer to be used for agreed capital enhancements. Belmond will continue to operate 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 was deferred to be recognized over the initial period of the management agreement. The gain on sale of $3,704,000 recognized on March 21, 2014 and the subsequent release of the deferred gain is reported within gain on disposal of property, plant and equipment and equity method investments in the statements of consolidated operations.

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

Year ended December 31,	2014
	Inn at Perry Cabin by Belmond
	March 21, 2014
	$'000
Property, plant & equipment	32,293
Net working capital deficit	(820	)
Net assets	31,473
Consideration:
Cash	25,680
Reduction in debt facility on sale of hotel	11,020
Key money retained by buyer	3,000
Less: Working capital adjustment	(1,130	)
Less: Costs to sell	(393	)
	38,177
Gain on sale	6,704

(b)    Results of discontinued operations

Belmond 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 the owner's unannounced dispossession of Belmond from the hotel in November 2013, however, Belmond was unable to continue to operate the hotel. Belmond believed that the owner's actions were unlawful and constituted a wrongful dispossession and has pursued its legal remedies under the lease. See Note 19. As Belmond 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.

The Porto Cupecoy development was sold in January 2013, with the final unit disposed of in September 2014. Revenue and residual costs relating to the sale of Porto Cupecoy are presented within discontinued operations for all periods shown.

Summarized results of the properties classified as discontinued operations for the years ended December 31, 2016, 2015 and 2014 are as follows: 

	Year ended December 31, 2016
	Ubud Hanging Gardens	Porto Cupecoy	Total
	$'000	$'000	$'000
Revenue	—	—	—
Earnings before tax, gain on sale and impairment	69	963	1,032
Earnings before tax	69	963	1,032
Net earnings from discontinued operations	69	963	1,032

	Year ended December 31, 2015
	Ubud Hanging Gardens		Porto Cupecoy		Total
	$'000		$'000		$'000
Revenue	—		—		—
Losses before tax, gain on sales and impairment	(636	)	(898	)	(1,534	)
Losses before tax	(636	)	(898	)	(1,534	)
Net losses from discontinued operations	(636	)	(898	)	(1,534	)

	Year ended December 31, 2014
	Ubud Hanging Gardens		Porto Cupecoy		Total
	$'000		$'000		$'000
Revenue	—		600		600
Losses before tax, gain on sale and impairment	(1,486	)	(1,583	)	(3,069	)
Losses before tax	(1,486	)	(1,583	)	(3,069	)
Tax provision	(713	)	—		(713	)
Net losses from discontinued operations	(2,199	)	(1,583	)	(3,782	)

The results of discontinued operations for the year ended December 31, 2016 included earning of $69,000 due to the partial release of legal fee accruals in relation to Ubud Hanging Gardens, where Belmond is pursuing legal remedies following its dispossession by the owner in November 2013. In addition, the results of discontinued operations for the year ended December 31, 2016 included earnings of $963,000 at Porto Cupecoy due to the release of a provision in respect of tax claims that Belmond believes it is now effectively discharged from. See Note 19.

The results of discontinued operations for the years ended December 31, 2015 and 2014 comprised legal fees of $636,000 and $1,486,000 , respectively, in relation to Ubud Hanging Gardens.