Notes to the Consolidated Financial Statements continuedfor the year ended 31 December 2007
24 Obligations under finance leases
|Minimum lease payments||Present value of minimum lease payments|
|Amounts payable under finance leases|
|Within one year
– 2006 as previously reported
|Prior year adjustment1||–||6.9||–||6.9|
|Within one year – 2006 as restated||280.3||295.8||273.0||290.1|
|Between two and five years||0.7||2.1||0.7||2.0|
|Less: future finance charges||(7.3)||(5.8)|
|Present value of finance lease obligations||273.7||292.1||273.7||292.1|
|Current liabilities (due for settlement within one year) – 2006 as previously reported||273.0||283.2|
|Prior year adjustment1||–||6.9|
|Current liabilities (due for settlement within one year) – 2006 as restated||273.0||290.1|
|Non-current liabilities (due for settlement after more than one year)||0.7||2.0|
- 1 Restated following the prior year adjustment regarding Avis Portugal (see Note 33).
It is the Group’s policy to fund certain of its vehicles (including some vehicles held under repurchase arrangements) and some plant and equipment under finance leases. The average lease term is less than one year. For the year ended 31 December 2007, the average effective interest rate was 4.5% (2006: 3.2%). All finance leases are on a fixed repayment basis and interest rates are fixed at the contract date. No arrangements have been entered into for contingent rental payments.
The fair value of the Group's obligations under finance leases approximates to their carrying amount, and is secured by the lessors either having legal title or charges over the leased assets. In addition, collateral is held against certain of the leases (see Note 15).