IBERSOL | Annual Report 2020

Consolidated Financial Statements 2.6 CURRENCY EXCHANGE RATE a) Working and reporting currency The Financial Statements of each group entity are prepared using the currency of the region in which the entity operates (“working currency”). The consolidated fi- nancial statements are presented in Euro. Ibersol’s working currency and the Group’s reporting currency. b) Transactions and balances Exchange differences resulting from the settlement of monetary items or from the conversion of monetary items at rates different from those at which they were con- verted at initial recognition or, in previous financial statements, are recognized in the income statement, unless they result from monetary items that are part of net invest- ment in a foreign operation. In this case, exchange differences are initially recognized in other comprehensive income and are reclassified from equity to the consolidated net income for the period on the total or partial disposal of that operating unit. Exchange differences related to (financial) financing transactions are recorded as fi- nancial costs or income. Exchange differences related to operating activities are re- corded under the heading “Other operating income / (costs)”. c) Financial statements Financial statements assets and liabilities of foreign entities are converted to Euro through the exchange rates at the balance sheet date. Profit and loss as well as the cash flows statements are translated into Euro through the average exchange rate recorded during the period. The resulting exchange difference is recorded in equity under the heading “Exchange rate reserves”. Goodwill and fair value adjustments arising from the acquisition of foreign entities are treated as assets and liabilities of that entity and translated into Euro according to the exchange rate at the balance sheet date. When a foreign entity is disposed, the accumulated exchange rate difference is rec- ognised in the income statement as a gain or loss on disposal. As at 31 December 2020 and 2019 the exchange rate used for conversion of transac- tions and balances denominated in Kwanzas in were, respectively: dec. 2020 Euro exchange rates (x foreign currency per 1 Euro) Rate on December, 31 2020 Average interest rate year 2020 Kwanza de Angola (AOA) 796,813 703,730 dec. 2019 Euro exchange rates (x foreign currency per 1 Euro) Rate on December, 31 2019 Average interest rate year 2019 Kwanza de Angola (AOA) 536,193 408,497 320