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Fair value measurements
6 Months Ended
Jun. 30, 2017
Fair Value Disclosures [Abstract]  
Fair value measurements
Fair value measurements

(a)     Financial instruments recorded at fair value
  
The following tables summarize the valuation of Belmond’s financial instruments recorded at fair value by the fair value hierarchy at June 30, 2017 and December 31, 2016:
 
 
Level 1
 
Level 2
 
Level 3
 
Total
June 30, 2017
 
$’000
 
$’000
 
$’000
 
$’000
 
 
 
 
 
 
 
 
 
Assets at fair value:
 
 

 
 
 
 
 
 
Derivative financial instruments
 

 

 

 

 
 
 
 
 
 
 
 
 
Total assets
 

 

 

 

 
 
 
 
 
 
 
 
 
Liabilities at fair value:
 
 

 
 
 
 

 
 
Derivative financial instruments
 

 
(2,388
)
 

 
(2,388
)
 
 
 
 
 
 
 
 
 
Total net liabilities
 

 
(2,388
)
 

 
(2,388
)

 
 
Level 1
 
Level 2
 
Level 3
 
Total
December 31, 2016
 
$’000
 
$’000
 
$’000
 
$’000
 
 
 
 
 
 
 
 
 
Assets at fair value:
 
 

 
 
 
 
 
 
Derivative financial instruments
 

 

 

 

 
 
 
 
 
 
 
 
 
Total assets
 

 

 

 

 
 
 
 
 
 
 
 
 
Liabilities at fair value:
 
 

 
 

 
 

 
 
Derivative financial instruments
 

 
(3,364
)
 

 
(3,364
)
 
 
 
 
 
 
 
 
 
Total net liabilities
 

 
(3,364
)
 

 
(3,364
)

 
During the three and six months ended June 30, 2017, there were no transfers between levels of the fair value hierarchy.

(b)    Other financial instruments
 
Certain methods and assumptions are used to estimate the fair value of each class of financial instruments. The carrying amount of current assets and current liabilities as disclosed on the condensed consolidated balance sheets approximate their fair value due to the short-term nature of those instruments.
 
The fair value of Belmond's long-term debt, excluding interest rate swaps and caps, is determined using the contractual cash flows and credit-adjusted discount curves. The fair value of the debt is the present value of those contractual cash flows which are discounted at the current market cost of debt and adjusted for the credit spreads. Credit spreads take into consideration general market conditions, maturity and collateral.

The estimated carrying values, fair values, and levels of the fair value hierarchy of Belmond's long-term debt as of June 30, 2017 and December 31, 2016 were as follows:
 
 
 
June 30, 2017
 
December 31, 2016
 
 
 
Carrying
amounts
$’000
 
Fair value
$’000
 
Carrying
amounts
$’000
 
Fair value
$’000
 
 
 
 
 
 
 
 
 
 
Total long-term debt, before deduction of discount on secured term loan and debt issuance costs, excluding obligations under capital leases
Level 2
 
657,549

 
658,666

 
602,083

 
626,613


(c)    Non-financial assets measured at fair value on a non-recurring basis

The estimated fair values of Belmond’s non-financial assets measured at fair value on a non-recurring basis for the six months ended June 30, 2017.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value measurement inputs
 
 
 
 
Fair value
 
Level 1
 
Level 2
 
Level 3
 
Total losses in the six months ended June 30, 2017
 
 
$’000
 
$’000
 
$’000
 
$’000
 
$’000
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment
 
5,955

 

 

 
5,955

 
(8,216
)
 
 
 
 
 
 
 
 
 
 
 

Property, plant and equipment

In the six months ended June 30, 2017, property, plant and equipment at Belmond Road to Mandalay and Belmond Northern Belle with a combined carrying value of $14,173,000 was written down to fair value of $5,955,000, resulting in a non-cash impairment charge of $8,216,000.

These impairments are included in earning from continuing operations in the period incurred. See Note 7.

There were no non-financial assets measured at fair value on a non-recurring basis for the six months ended June 30, 2016.