| 3.3 | Foreign currency translation |
The consolidated financial statements are presented in Russian rubles (RUB), which is the Company’s functional and the Group’s presentation currency. Each entity in the Group determines its own functional currency, depending on what the underlying economic environment is, and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency at the functional currency rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are re-measured in to the functional currency at the functional currency rate of exchange at the reporting date. All differences are taken to profit or loss. They are shown separately for each Group company but netted by major types of monetary assets and liabilities. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as of the dates of the initial transactions.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on retranslation of non-monetary items is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognized in other comprehensive income or profit or loss is also recognized in other comprehensive income or profit or loss, respectively).
The functional currency of the foreign operations is generally the respective local currency – US Dollar (U.S.$), Euro (€), Kazakhstan tenge (KZT), Belarussian ruble (BYR), Moldovan leu (MDL) and New Romanian leu (RON).
As of the reporting date, the assets and liabilities of these operations are translated into the presentation currency of the Group (the Russian Ruble) at the rate of exchange at the reporting date and their statements of comprehensive income are translated at the average exchange rates for the year or exchange rates prevailing on the date of specific transactions. The exchange differences arising on the translation are recognized in other comprehensive income. On disposal of a foreign entity, the deferred cumulative amount recognized in equity relating to that particular foreign operation is reclassified to the profit or loss.
The exchange rates of the Russian ruble to each respective currency as of December 31, 2017 and 2016 were as follows:
|
Average exchange rates for the year ended December 31, |
Exchange rates
at December 31, |
|||||||||||||||
| 2016 | 2017 | 2016 | 2017 | |||||||||||||
|
US Dollar |
67.0349 | 58.3529 | 60.6569 | 57.6002 | ||||||||||||
|
Euro |
74.2310 | 65.9014 | 63.8111 | 68.8668 | ||||||||||||
|
Kazakhstan Tenge (100) |
19.5980 | 17.8959 | 18.1637 | 17.3184 | ||||||||||||
|
Belarussian Ruble |
33.7165 | 30.2125 | 30.9474 | 29.1013 | ||||||||||||
|
Moldovan Leu (10) |
33.6961 | 31.6871 | 30.5269 | 33.6548 | ||||||||||||
|
New Romanian Leu |
16.5315 | 14.4216 | 14.0722 | 14.7822 | ||||||||||||
The currencies listed above are not a fully convertible outside the territories of countries of their operations. Related official exchange rates are determined daily by the Central Bank of the Russian Federation (further CBR). Market rates may differ from the official rates but the differences are, generally, within narrow parameters monitored by the respective Central Banks. The translation of assets and liabilities denominated in the currencies listed above into RUB for the purposes of these financial statements does not indicate that the Group could realize or settle, in RUB, the reported values of these assets and liabilities. Likewise, it does not indicate that the Group could return or distribute the reported RUB value of capital and retained earnings to its shareholders.