Note 19 — Finance Leases
The Group leases all of its real estate properties except for the properties located in Via Lazio 95 in Buccinasco, Via Buozzi 22 in Buccinasco, and Corso Europa 22 in Milan.
Such assets are classified as finance leases as the Group has the right to purchase the assets outright at the end of the minimum lease term by paying a nominal amount. The total fair value of the investment properties that carried finance leases was $29,742,423, $25,731,052 and $26,908,602 as of December 31, 2017, 2016 and 2015, respectively.
Future minimum lease payments due are as follows:
| 2017 | Minimum
lease payments |
Interest | Present
value |
|||||||||
| Less than one year | $ | 2,180,616 | $ | 1,049,434 | $ | 1,131,182 | ||||||
| Later than one year and not later than five years | 7,236,202 | 3,231,225 | 3,967,793 | |||||||||
| Later than five years | 16,296,170 | 3,115,542 | 13,180,628 | |||||||||
| Total | $ | 25,712,988 | $ | 7,396,201 | $ | 18,279,603 | ||||||
| 2016 | Minimum lease payments |
Interest | Present value |
|||||||||
| Less than one year | $ | 1,920,618 | $ | 998,984 | $ | 921,634 | ||||||
| Later than one year and not later than five years | 6,739,259 | 3,156,663 | 3,582,596 | |||||||||
| Later than five years | 16,073,358 | 3,600,982 | 12,472,376 | |||||||||
| Total | $ | 24,733,235 | $ | 7,756,629 | $ | 16,976,606 | ||||||
| 2015 | Minimum
lease payments |
Interest | Present
value |
|||||||||
| Less than one year | $ | 3,514,879 | $ | 1,658,525 | $ | 1,856,354 | ||||||
| Later than one year and not later than five years | 5,952,787 | 3,426,567 | 2,526,220 | |||||||||
| Later than five years | 18,934,300 | 4,942,163 | 13,992,137 | |||||||||
| Total | $ | 28,401,966 | $ | 10,027,255 | $ | 18,374,711 | ||||||
As at December 31, 2017, 2016 and 2015, the effective interest rate varies from EURIBOR+1.4% to EURIBOR+2.762%. This amounted to 1.07% to 2.432%, 1.08% to 2.442%and 1.27% to 2.632% as of December 31, 2017, 2016 and 2015, respectively.
The present value of the future minimum lease payments are categorized as follows:
| 2017 | 2016 | 2015 | ||||||||||
| Current liabilities | $ | 1,131,182 | $ | 921,634 | $ | 1,856,354 | ||||||
| Non-current liabilities | 17,148,421 | 16,054,972 | 16,518,357 | |||||||||
| Total | $ | 18,279,603 | $ | 16,976,606 | $ | 18,374,711 | ||||||
During 2015, two of the three affected finance lease creditors granted the Group modification repayment plans. As of December 31, 2015, Management was still undergoing negotiations with the remaining affected finance lease creditor and could not provide assurance that this finance lease creditor would not decide to refuse granting the requested modification repayment plans to the Group. As a result, the Group classified this one residual finance lease as current loans and borrowings as of December 31, 2015. During 2016, the Group successfully obtained the approval from this finance lease creditor of a modification repayment plan. As a result, Management has not classified the full portion of this finance lease as current loans and borrowing as of December 31, 2017 and 2016.
In addition, during 2016, one of the Subsidiaries missed certain scheduled payment to a finance lease creditor, but has since obtained the approval from this finance lease creditor of a modification repayment plan. As a result, Management has not classified the full portion of this affected finance lease as current loans and borrowing as of December 31, 2017 and 2016.
During 2017, the Group has been current with all scheduled lease payments and the repayment plans approved by the finance lease creditors.