Property, plant and equipment

3 Months Ended

Mar. 31, 2017

Property, Plant and Equipment [Abstract]

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



	March 31, 2017		December 31, 2016
	$’000		$’000

Land and buildings	1,026,444		1,010,362
Machinery and equipment	185,587		179,537
Fixtures, fittings and office equipment	244,896		235,098
River cruise ship and canal boats	19,080		18,618

	1,476,007		1,443,615
Less: Accumulated depreciation	(386,924	)	(368,939	)

Total property, plant and equipment, net of accumulated depreciation	1,089,083		1,074,676

The depreciation charge on property, plant and equipment for the three months ended March 31, 2017 was $13,595,000 (March 31, 2016 - $12,944,000).

The table above includes property, plant and equipment, net of accumulated depreciation, of Charleston Center LLC, a consolidated VIE, of $200,864,000 at March 31, 2017 (December 31, 2016 - $201,861,000).

There were no impairments of property, plant and equipment in the three months ended March 31, 2017 and in the three months ended March 31, 2016.

In the three months ended March 31, 2017, Belmond considered whether the decline in performance of Belmond Road to Mandalay caused by increased competition in Myanmar indicated that the carrying amount of the business’s fixed assets may not be recoverable. Belmond concluded that an impairment trigger existed and an impairment test was required. Under the first step of the fixed assets impairment test, the sum of the undiscounted cash flows expected to result from Belmond Road to Mandalay was approximately 23% in excess of its carrying value. The impairment test remains sensitive to changes in assumptions; factors that could reasonably be expected to potentially have an adverse effect on the sum of the undiscounted cash flows of the asset group include the future operating projections of the river cruise business, particularly passenger numbers, ticket prices and fixed costs. Any failure to meet these assumptions may result in an impairment charge that would write down the carrying value of assets to fair value in future periods.

In the three months ended March 31, 2017, Belmond considered whether the decline in performance of Belmond Northern Belle caused by a reduction in passenger numbers sourced mainly from regional markets in the U.K. indicated that the carrying amount of the business’s fixed assets may not be recoverable. While Belmond concluded that there was no impairment trigger in the current quarter, it is carefully monitoring the situation. The impairment test remains sensitive to changes in assumptions; factors that could reasonably be expected to potentially have an adverse effect on the sum of the undiscounted cash flows of the asset group include the future operating projections of the train, particularly passenger numbers, ticket prices and maintenance spend, and any deterioration in the U.K. regional economy. Any failure to meet these assumptions may result in an impairment charge that would write down the carrying value of assets to fair value in future periods.

There was no capitalized interest in the three months ended March 31, 2017 and 2016.