Property, plant and equipment

9 Months Ended

Sep. 30, 2012

Property, Plant and Equipment [Abstract]

The major classes of property, plant and equipment are as follows:



	September 30, 2012		December 31, 2011
	$’000		$’000
Land and buildings	1,041,874		992,748
Machinery and equipment	189,947		181,467
Fixtures, fittings and office equipment	194,877		184,618
River cruise ship and canal boats	18,193		18,061

	1,444,891		1,376,894
Less: Accumulated depreciation	(297,148	)	(269,237	)

	1,147,743		1,107,657

The major classes of assets under capital leases included above are as follows:



	September 30, 2012		December 31, 2011
	$’000		$’000
Freehold and leased land and buildings	4,548		4,461
Machinery and equipment	914		828
Fixtures, fittings and office equipment	101		102

	5,563		5,391
Less: Accumulated depreciation	(1,317	)	(1,164	)

	4,246		4,227

The depreciation charge on property, plant and equipment for the three and nine months ended September 30, 2012 was $10,425,000 (2011 - $11,732,000) and $31,225,000 (2011 - $34,613,000), respectively.

No property, plant and equipment impairments were recorded during the three and nine months ended September 30, 2012.

During the three months ended September 30, 2011, OEH identified a non-cash property, plant and equipment impairment charge of $2,308,000 in respect of Casa de Sierra Nevada, San Miguel de Allende, Mexico. The carrying value was written down to the hotel's fair value.

As part of the overall impairment charge at Porto Cupecoy during the three months ended September 30, 2011, OEH identified a non-cash property, plant and equipment impairment charge of $1,677,000 in respect of this property development. See Note 5.

As of September 30, 2012, the property, plant and equipment of Charleston Center LLC, a consolidated VIE, of $184,418,000 (December 31, 2011 - $185,788,000) is separately disclosed on the condensed consolidated balance sheet. See Note 3.

For the three and nine months ended September 30, 2012, OEH capitalized interest in the amount of $1,003,000 (2011 - $Nil) and $2,905,000 (2011 - $Nil), respectively. For the year ended December 31, 2011, capitalized interest amounted to $863,000. All amounts capitalized were recorded in property, plant and equipment.

New York hotel project

On March 18, 2011, OEH agreed to assign its purchase and development agreements previously made with the New York Public Library relating to the site of the Donnell branch of the Library adjacent to OEH's '21' Club restaurant to an affiliate (the “Assignee”) of Tribeca Associates, LLC and Starwood Capital Group Global LLC. The Assignee agreed to assume all the terms and obligations of the contracts and to reimburse all previous deposit payments made by OEH and a $2,000,000 contribution toward fees incurred by OEH. The transaction closed on April 7, 2011, resulting in gross proceeds received by OEH of $25,500,000. This transaction resulted in a gain, net of costs, of $502,000 in the nine months ended September 30, 2011.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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