| (g) | Foreign currencies |
The Group’s consolidated financial statements are presented in Russian rubles to comply with the Law 208-FZ. Russian rubles is also the parent company’s functional currency.
For each entity, the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency. The functional currencies of the main Russian and European subsidiaries of the Group are the Russian ruble and euro, respectively. The U.S. dollar is the functional currency of other main international operations of the Group. The Group uses the direct method of consolidation and on disposal of a foreign operation, the gain or loss that is reclassified to profit or loss reflects the amount that arises from using this method.
| (i) | Transactions and balances |
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at 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 following table presents the exchange rates for the functional and operating currencies at various subsidiaries, other than the presentation currency:
| Rates at | Average exchange rates* for the years ended |
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|
Currency |
December 31, 2017 |
December 31, 2016 |
December 31, 2015 |
December 31, 2017 |
December 31, 2016 |
December 31, 2015 |
||||||||||||||||||
|
U.S. dollar |
57.60 | 60.66 | 72.88 | 58.35 | 67.03 | 60.96 | ||||||||||||||||||
|
Euro |
68.87 | 63.81 | 79.70 | 65.90 | 74.23 | 67.78 | ||||||||||||||||||
| (*) | Exchange rates shown in Russian rubles for one currency unit. |
The majority of the balances and operations not already denominated in the presentation currency were denominated in the U.S. dollar and euro. The Russian ruble is not a convertible currency outside the territory of Russia. Official exchange rates are determined daily by the Central Bank of Russia (“CBR”) and are generally considered to be a reasonable approximation of market rates.
| (ii) | Group companies |
On consolidation, the assets and liabilities of foreign operations are translated into rubles at the rate of exchange prevailing at the reporting date and their statements of profit (loss) and other comprehensive income (loss) are translated at the average exchange rate for the period. The exchange differences arising on translation for consolidation are recognised in OCI. On disposal of a foreign operation, the component of OCI relating to that particular foreign operation is recognised in profit or loss.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date.