PLC AUDITED SEPARATE FINANCIAL STATEMENTS 2015

Ngo Due GiangDeputy General Director BOARD OF DIRECTORS' STATEMENT OF RESPONSIBILITY The Board of Directors of the Corporation is responsible for preparing the separate financial stateme

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TABLE OF CONTENTS

CONTENTSPAGEIS1

STATEMENT OF THE BOARD OF DIRECTORS2

INDEPENDENT AUDITORS' REPORT3

BALANCE SHEET4-5

INCOME STATEMENT6

CASH FLOW STATEMENT7

NOTES TO THE SEPARATE FINANCIAL STATEMENTS8-28

PETROUMEX PETROCHEMICAL CORPORATION - JSC

Floors 18 & 19,229 Tay Son, Nga Tu So Ward

Dong Da District, Hanoi, S.R Vietnam

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General Director

Hanoi, 25 March 2016

Mr Pham Ba NhuanChairman

Mr Nguyen Van DueMember

Mr Nguyen Van KhanhMember

Mr Vu Van Chien 'Member

Mr Ha Thanh TuanMember

Board of Directors

Mr Nguyen Van DueGeneral Director

Mr Le Quang TuanDeputy General Director

Mr Ngo Due GiangDeputy General Director

BOARD OF DIRECTORS' STATEMENT OF RESPONSIBILITY

The Board of Directors of the Corporation is responsible for preparing the separate financial statements, whichgive a true and fair view of the financial position of the Corporation and of its results and cash flows for the year

in accordance with Vietnamese Accounting Standards, accounting regime for enterprises and legal regulationsrelating to financial reporting In preparing these separate financial statements, the Board of Directors is requiredto:

•Select suitable accounting policies and then apply them consistently;

•Make judgments and estimates that are reasonable and prudent;

•State whether applicable accounting principles have been followed, subject to any material departuresdisclosed and explained in the separate financial statements;

•Prepare the separate financial statements on the going concern basis unless it is inappropriate to presume thatthe Corporation will continue in business; and

•Design and implement an effective internal control system for die purpose of properly preparing andpresenting the separate financial statements so as to minimize errors and frauds

The Board of Directors is responsible for ensuring that proper accounting records are kept, which disclose, withreasonable accuracy at any time, the financial position of the Corporation and that the separate financialstatements comply with Vietnamese Accounting Standards, accounting regime for enterprises and legalregulations relating to financial reporting The Board of Directors is also responsible for safeguarding the assets ofdie Corporation and hence for taking reasonable steps for the prevention and detection of frauds and otherirregularities

The Board of Directors confirms that the Corporation has complied with the above requirements in preparing

tors,

STATEMENT OF THE BOARD OF DIRECTORS

The Board of Directors of Petrolimex Petrochemical Corporation - JSC (the "Corporation") presents this reporttogether with the Corporation's separate financial statements for the year ended 31 December 2015

THE BOARDS OF MANAGEMENT AND DIRECTORS

The members of the Boards of Management and Directors of the Corporation who held office during die year and

to the date of this report are as follows:

Board of Management

PETROLIMEX PETROCHEMICAL CORPORATION - JSC

Floors 18 & 19, 229 Tay Son, Nga Tu So Ward

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Dang Chi Dung

Deputy General Director

Audit Practising Registration Certificate

No 0030-2013-001-1

For and on behalf of

DELOITTE VIETNAM COMPANY LIMITED

25 March 2016

Hanoi, S.R Vietnam

Deloitte refers to one or more of Deloitte Touctie Tohmatsu Limited, a UK private company limited by guarantee

fDTTL"), its network of member firms, and their related entities DTTL and each of its member firms are legally

separate and independent entities DTTL (also referred to as "Deloitte Global") does not provide services to clients

Le Anh SonAuditorAudit Practising Registration Certificate

No 1961-2013-001-1

INDEPENDENT AUDITORS' REPORT

To: The Shareholders

The Boards of Management and Directors

Petrolimex Petrochemical Corporation - JSC

We have audited the accompanying separate financial statements of Petrolimex Petrochemical Corporation - JSC(the "Corporation"), prepared on 25 March 2016 as set out from page 4 to page 28, which comprise the balancesheet as at 31 December 2015, and the statement of income and statement of cash flows for the year then ended,and a separate summary of significant accounting policies and other explanatory information

Management's Responsibility for the Separate financial statements

Management is responsible for the preparation and fair presentation of these separate financial statements inaccordance with Vietnamese Accounting Standards, accounting regime for enterprises and legal regulationsrelating to financial reporting and for such internal control as management determines is necessary to enable thepreparation of separate financial statements that are free from material misstatement, whether due to fraud orerror

Auditors' Responsibility

Our responsibility is to express an opinion on these separate financial statements based on our audit Weconducted our audit in accordance with Vietnamese Standards on Auditing Those standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether theseparate financial statements are free from material misstatement

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in theseparate financial statements The procedures selected depend on the auditors' judgment, including the assessment

of the risks of material misstatement of the separate financial statements, whether due to fraud or error In makingthose risk assessments, the auditors consider internal control relevant to the Corporation's preparation and fairpresentation of the separate financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation's internalcontrol An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness

of accounting estimates made by management, as well as evaluating the overall presentation of the separatefinancial statements

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit

opinion

Opinion

atements present fairly, in all material respects, the financial position of theand its financial performance and its cash flows for the year then ended in

ig Standards, accounting regime for enterprises and legal regulations

12A Floor Vinaconex Tower

34 Lang Ha Street, Dong Da District

Ha Noi, VietnamTel: +844 6288 3568Fax: +844 6288 5678www.deloitte.com/vnDeloitte.

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The notes set out on pages 08 to 28 are an integral part of these separate financial statements

1227218,755281

74,092,630,526

74292230226

(11288,940,486) 70,557,956,000 300,000,000,000

359269,015214

78,104,726,078 78,104,726,078 (2,423,024,165)

3.814,284,398

1,391,260233 (142,336,487,755) 243,594,468,199 101257,980,444

102249240277

614,115212,795 1,700,179,873 8,844,345,144 735,331,912

11279256229 542287262,857 542287262257

172,974,117 (18,883203,454) 95,220,090,766 45,155,629,415 199293,117,205

320258208,049

57,400,000 38,419,915,351

38277215251

913,103,143,186

31/12/2014

UnitVND FORMB01-DN

1287244,716,947 60,011,106,053 60,011,106,053 (9,510,444,917) 70,557,956,000 400,000,000,000 461,047211,083 115,543233,247

115243233247

(3,681,729.017) 3,814,284,398 132,555,381 (168,353,011,291) 278,319,205,019 109,966,193,728 110,098,749,199 746,700299,492

3,491,711,216 3,491,711,216 424,934,618,866 424,934,618,866 109,888,512 (19260,601,357) 23,164,874,199 26,320,291,349 134,007,779,966 165,042232.669 49,795,000 47,325,759,704

12 11

10

9 g 7 5

Notes

270 261 260 254 252 251 250 242 240 229 228 227 221 222 221 220 200 153 152 151 150 141 140 139 137 136 132 131 130 112 111 110 100

Codes

TOTAL ASSET (270-1M 4 200)

1 Long-tetm prepayments

IV Other long-term assets

3 Provision for impairment of long-tenn financial

2 Investments in joint-ventures, associates

3 Taxes and other receivables hum the Stale budget

2 Value added tax deduetibles

1 Short-tenn prepayments

IV Other short-term sssets

1 Inventories

BL Inventories

5 Deficits in assets awaiting solution

4 Provision for short-term doubtfol debts

3 Other short-tenn receivables

2 Shoit-term advances to suppliers

1 Short-term trade receivables

Separate financial statements

For the year ended 31 December 2015

Floors 18 & 19,229 Tay Son, Nga Tu So Waid

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n integral part of these separate financial statements

5The notes set out on pages 08 to 28 a

General DirectorManager of Finance and

Accounting DepartmentHanoi, 25 March 2016

Nguyen Quang Hung

263527300,571

(12,730,000) 466500,000 3,561,050,000 702,608,370,000 1,013580,441518

1513580,441518

(5586,685,534)

162,140,873,632 195,561,211,976 24,798,584 24,401,236,913 13,001,717,612 1,593,431,433 122,201,729,847

513,638514563 513,638514563 31/12/2014

Unit: VND FORMB01-DN

104,1166,687,803

(46,504,365,599) 58,162,322,204 20,463,604,691 198,388,796,611 (12,730,000) 466,200,000

3,561,050,000

807,988,390,000 1,089,017,633506 l,089,017.63356 (4,138,921,120)

152549,552,808

8,016,736,076

9,293,603,151 20,852,194,853 15,004,101,360

4,640,795,813

92,609,020,500 298527,083,441 298527.083,441 31/12/2015

20

19 18 17 12 10Nates

421b

421a

421 420 418 415 414 412 411 410 400 322 320 319 315 314 313 312 311 310 300

Cedes

-Retained earnings ofthe current year

- Retained earnings acamulaled to the prior year

8 Bonus and welfare funds

7 Short-term loans and obligations under finance

leases

6 Other cunent p^ables

5 Short-tetm acctued expenses

4 Payables to employees

3 Taxes and amounts payable to the State budget

2 Shott-tetm advances from customets

1 Short-term trade payables

1 Current liabilities

C LIABILITIES

RESOURCES

Asm 31 December 2015

BALANCE SHEET (Continued)

Separate financial statementsFor t^e year ended 31 December 2015

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The notes set out on pages 08 to 28 are an integral part of these separate financial statements

6

General DirectorP

Manager of Finance andAccounting Department

272464,706440 45,798439470

214,106,673,474

3,396,037,537

5,797,413428 70401,905,699

467465,126413 1,611427,477,638 2,078492,604451

2478492404451

-2014

UniCVND FORMB02-DN

347,059476435 49,865,675,180

396425,052,115

4430442493

7,639,828445 12,070,070,838

392494409422

49499467,838 224434,667,726

3,074,653,134

16,085,661,715 182,412,589,968

29 29 26 25

23 22

22Notes

60 51

50 40 32 31

30 26 25 23 22 21

20 11 10 02 01

Codes

16 Net profit after corporate income tax

15 Current corporate income tax expense

(50-30^40)

14 Accounting profit before tax

13 Profit from other activities (40-31-32)

Floors 18 & 19,229 Tay Son, NgaTu So Ward

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77m notes set out on pages 08 to 28 are an integral part of these separate financial statements

7

^ ^6eneral Director

~'Nguy^n Van Due

Accounting DepartmentManager of Finance and ';i^;^:

Phuong Thao Hien V^

^^^-Hanoi, 25 March 2016

Preparer

Nguyen QuangHung

38,477315351 59399,429

99,893,456235 (61,475,440313) (52,667340,445) (97,460,326,500) (832,934,514,513) 877,727,500,568

(93395,566,375) 698272,912

95318,182

(94,089,157,469)

04,407,466,507 (9,815,424,154) (46,951,153,762) (3,396,037,537) (809,521,354)

(29,564398,020)

(73,096,236,369) 9,753,500,066 230366,737,637 3,396,037,537 (68,000,354,245) 232,444,990 356,062,240 22385,079,489 279,797,467,626

2014

UnittVND FORM B 03-DN

47375354,704 61390279 38,477315351

8,836349,074 (460,243,572,724) (450,399,294,550) (929,112,912215) 919268,634,041

75,023,003,003 244,051,516,037 (100,000,000,000)

577399,130

(68,805,831364)

393357337,995 (7,003,862,201) (52,487,605,364) (3,074,653,184) 11,325,145,169 (24,932,765,373) 117,452,743,991 98,722,073,636

253356,261321

3,074,653,184 (177,178,277,498) 1,125,975,999 (1,301,097,666) 30,609,955,187 396,923,052,115

2015

70 61

60 50 40

36

34 33

30

27

25 22

21

20 17 15 14 12 11 10 09

08

06 05 04 03 02

07

Codes

Cash and cash equivalents at the end of the year

Effect of changes in foreign exchange rates

Cash and cash equivalents nt the beginning of the year

Net increase/(decrease) in cash (50-20430440)

Net cask (used in) financing activities

3 Dividends and profits paid

2 Repayment of borrowings

1 Proceeds from borrowings

IIL CASH FLOWS FROM FINANCING ACTIVITIES

Net cash generated byKused in) investing activities

4 Interest earned, dividends and profits received

3 Equity investments in other entities

long-term assets

2 Proceeds from sale, disposal of fixed assets and other

long-term assets

1 Acquisition and construction of fixed assets and other

II CASH FLOWS FROM INVESTING ACTIVITIES

Net cask generated by operating activities

Other cash outflows

Corporate income tax paid

Interest paid

Changes in prepaid expenses

corporate income tax payable)

Changes in payables (excluding accrued loan interest and

1 Profit before tax

L CASH FLOWS FROM OPERATING ACTIVITIES

ITEMS

For the year ended 31 December 2015CASH FLOW STATEMENT

PETROUMEX PETROCHEMICAL CORPORATION - JSC

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Floors 18 & 19,229 Tay Son, Nga Tu So WardSeparate financial statementsDong Da District, Hanoi, S.R VietnamFor die year ended 31 December 2015

NOTES TO SEPARATE THE FINANCIAL STATEMENTSFORM B 09-DN

These notes are an integral part of and should be read in conjunction with the accompanying separate financial statements

The parent company of the Corporation is Vietnam National Petroleum Group which owns 79.07% of theCorporation's shares Other shareholders own 20.93% of the Corporation's shares

The number of employees as at 31 December 2015 was 345 (31 December 2014:352).

Operating industry and principal activities

Operating industry and principal activities of the Corporation are to:

Trade and import, export lubricant, asphalt and chemicals (except for chemicals prohibited by die

State) and other commodities of oil and gas industry;

-Trade and import, export specialized materials and equipment of the petrochemical industry;

Provide transportation, warehouse, production, analysis and test, consultancy and technical services

relating to the petrochemical industry;

-Do real estate business;

Provide maritime services and ship supplies

Normal production and business cycle

The Corporation's normal production and business cycle is carried out for a time period of 12 months orless

Characteristics of the business activities in the fiscal year which have impact on the financialstatements

•According to Resolution No 21/NQ-PLC-HDQT dated 27 November 2014 of the Board of

Management, the Corporation has decided to dissolve Petrolimex Petrochemical Corporation

-JSC-Hai Phong Brach since 24h 31 December 2014;

•According to Decision No 22/QD-PLC-HDQT dated 30 March 2015 of the Board of

Management, the Corporation has decided to additionally contribute VND 100 billion to the

equity capital of Petrolimex Asphalt Company Limited.

The Corporation's structure

As at 31 December 2015, the Corporation has branches as follows:

-Petrolimex Petrochemical Corporation - JSC - Da Nang Branch;

-Petrolimex Petrochemical Corporation - JSC - Sai Gon Branch;

Petrolimex Petrochemical Corporation - JSC - Can Tho Branch

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Disclosure of information comparability in the financial statements

As stated in Note 3, since 01 January 2015, the Corporation has adopted Circular No 200/2014/TT-BTCissued by the Ministry of Finance on 22 December 2014 ("Circular 200") guiding the accounting regimefor enterprises This Circular is effective for the financial year beginning on or after 01 January 2015.Circular 200 supersedes the regulations for accounting regime promulgated under Decision No

15/2006/QD-BTC dated 20 March 2006 issued by the Ministry of Finance and Circular No

244/2009^TT-BTC dated 31 December 2009 issued by the Ministry of Finance However, the adoption of Circular 200has no material impacts on information comparability in the separate financial statements

ACCOUNTING CONVENTION AND FINANCIAL YEAR

Accounting convention

The accompanying separate financial statements, expressed in Vietnam Dong (VND), are prepared underthe historical cost convention and in accordance with Vietnamese Accounting Standards, accountingregime for enterprises and legal regulations relating to financial reporting

These separate financial statements are prepared only for the Corporation as the holding company; itsconsolidated financial statements are prepared and issued separately These separate financial statementsshould be read in conjunction with the Corporation's consolidated financial statements for sufficientinformation about its financial performance in the year

The accompanying separate financial statements are not intended to present the financial position, results

of operations and cash flows in accordance with accounting principles and practices generally accepted mcountries and jurisdictions other than Vietnam

Financial year

lite Corporation's financial year begins cm 01 January and ends on 31 December

4,557,956,000 Consultation of

transporiationworks66,000,000,000 Petrochemical

transportationHanoi, Victim43.78% 43.7!%

aw aw

Hanoi, Vietnam

VND

Hanoi, Viemtan100% 100% 250,000,000,000 Trading asphalt

^^noi, Vietnam100% 100% 150,000,000,000 Trading chemical

Civil Engineeriiig Constitution Joint

Steak Company No.S10

VP Petrochemical Transport Joint

Stock Company

^ace of Proportion ProportionInvestmentincorporation of ownership of votingvalue is at Principaland operationinterest power heW 31 December 2015 activitiesCompany name

NOTES TO SEPARATE THE FINANCIAL STATEMENTS (Continued)FORM B 09-DN

1.GENERAL INFORMATION (Continued)

The Corporation's structure (Continued)

As at 31 December 2015, die Corporation has 02 subsidiaries and 02 associates General information ofsubsidiaries and associates of the Corporation is as follows:

Separate financial statementsFor the year ended 31 December 2015

Dong Da District, Hanoi, S.R Viemam

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Floors 18 & 19,229 lay Son, Nga Tu So WardSeparate financial statementsDong Da District, Hanoi, S.R VietnamFor the year ended 31 December 2015

NOTES TO THE SEPARATE FINANCIAL STATEMENTS (Continued)FORM B 09-DN

These notes are an integral part of and should be read in corgunction with the accompanying separate financial statements

3.ADOPTION OF NEW ACCOUNTING GUIDANCE

On 22 December 2014, the Ministry of Finance issued Circular No 200/2014/TT-BTC ("Circular 200")

guiding the accounting regime for enterprises This Circular is effective for financial years beginning on

or after 01 January 2015 Circular 200 supersedes the regulations for accounting regime promulgatedunder Decision No 15/2006/QD-BTC dated 20 March 2006 issued by the Ministry of Finance andCircular No 244/2009^Tr-BTC dated 31 December 2009 issued by the Ministry of Finance The Board ofDirectors has adopted Circular 200 in the preparation and presentation of the separate financial statementsfor the year ended 31 December 2015

4.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies, which have been adopted by die Corporation in the preparation ofthese separate financial statements, are as follows:

Estimates

The preparation of separate financial statements in conformity with Vietnamese Accounting Standards,accounting regime for enterprises and legal regulations relating to financial reporting requiresmanagement to make estimates and assumptions that affect the reported amounts of assets, liabilities anddisclosures of contingent assets and liabilities at the date of the separate financial statements and thereported amounts of revenues and expenses during the financial year Although these accounting estimatesare based on the management's best knowledge, actual results may differ from those estimates

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits, gold and jewelry, cash in transit andshort-term, highly liquid investments that are readily convertible to known amounts of cash and which aresubject to an insignificant risk of changes in value

Investments in associates

An associate is an entity over which die Corporation has significant influence and that is neither asubsidiary nor an interest in joint venture Significant influence is the power to participate in the financialand operating policy decisions of the investee but not control or joint control over those policies

Interests in subsidiaries and associates are initially recognised at cost The Corporation's share of the netprofit of the investee after acquisition is recognised in the income statement Other income received otherthan such profit share are treated as return on the investments and deducted from the cost of theinvestments

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Inventories are stated at the lower of cost and net realisable value Cost comprises direct materials andwhere applicable, direct labour costs and those overheads that have been incurred in bringing dieinventories to their present location and condition.

Net realisable value represents the estimated selling price less all estimated costs to completion and costs

to be incurred in marketing, selling and distribution Inventories are accounted for under the perpetualmethod, cost of materials and tools received and delivered are calculated using FIFO method and cost offinished goods and merchandise are calculated using standard cost method (a method similar to estimatedand budget cost method) The difference between standard cost and actual cost of finished goods andmerchandise are allocated to cost of finished goods, merchandises sold and inventories as at the balancesheet date

The evaluation of necessary provision for inventory obsolescence follows current prevailing accountingregulations which allow provisions to be made for obsolete, damaged, or sub-standard inventories and forthose which have costs higher than net realisable values as at the balance sheet date

Floors 18 & 19,229 Tay Son, Nga Tu So WardSeparate financial statementsDong Da District, Hanoi, S.R VietnamFor the year ended 31 December 2015

4.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial investments (Continued)

Investments in subsidiaries, associates (Continued)

Investments in associates (Continued)

Investments in subsidiaries and associates are carried in die balance sheet at cost less provision forimpairment of such investments (if any) Provisions for impairment of investments in subsidiaries andassociates are made in accordance with Circular No 228/2009/TT-BTC dated 07 December 2009 issued

by the Ministry of Finance on "Guiding the appropriation and use of provisions for devaluation ofinventories, loss of financial investments, bad debts and warranty for products, goods and constructionworks at enterprises", Circular No 89/2013/TT-BTC dated 28 June 2013 by the Ministry of Financeamending and supplementing Circular No 228/2009/TT-BTC and prevailing accounting regulations

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YearsBuildings and structures5-20

Machinery and equipment3-8

Motor vehicles6-17

Office equipment3-5

Intangible assets and amortisation

Intangible assets represent computer software that is stated at cost less accumulated amortisation.Computer software are amortised using the straight-line method over the duration of 03 years

Construction in progress

Properties in the course of construction for production, rental or administrative purposes, or for thepurposes not yet determined, are carried at cost Cost includes costs that are necessary to form the assets inaccordance with the Corporation's accounting policy Depreciation of these assets, on the same basis asother property assets, commences when the assets are ready for their intended use

Prepayments

Prepayments are expenses which have already been paid but relate to results of operations of multipleaccounting periods Prepayments comprise prepaid office area investments, land rentals and other types ofprepayments

Office area investments at MIPEC Tower, No 229 Tay Son Street, Dong Da District, Hanoi and landrentals at Dinh Vu Industrial Park, Hai Phong Province represent prepaid amounts and are charged to theincome statement using the straight-line method over the lease term/useful life

Other types of prepayments comprise costs of small tools, supplies and spare parts issued for consumptionand others which are expected to provide future economic benefits to the Corporation These expenditureshave been capitalised as prepayments, and are allocated to the income statement using the straight-linemethod in accordance with the current prevailing accounting regulations

4,SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Tangible fixed assets and depreciation

Tangible fixed assets are stated at cost less accumulated depreciation

The costs of purchased tangible fixed assets comprise their purchase prices and any directly attributablecosts of bringing the assets to their working condition and location for their intended use

Tangible fixed assets are depreciated using die straight-line method over their estimated useful lives asfollows:

2015

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4.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue recognition

Revenue from the sale of goods is recognised when all five (5) following conditions are satisfied:

(a)frie Corporation has transferred to the buyer the significant risks and rewards of ownership of the goods;

(b)die Corporation retains neither continuing managerial involvement to the degree usually associated

with ownership nor effective control over the goods sold;

(c)die amount of revenue can be measured reliably;

(d)it is probable that the economic benefits associated with die transaction will flow to the Corporation;

and

(e)the costs incurred or to be incurred in respect of the transaction can be measured reliably

Interest income is accrued on a time basis, by reference to the principal outstanding and at die applicableinterest rate

Dividend income from investments is recognised when die Corporation's right to receive payment hasbeen established

Foreign currencies

The Corporation applies die method of recording foreign exchange differences in accordance withVietnamese Accounting Standard No 10 (VAS 10) "Effects of changes in foreign exchange rates".Accordingly, transactions arising in foreign currencies are translated at exchange rates ruling at thetransaction date The balances of monetary items denominated in foreign currencies as at the balance sheetdate are retranslated at the exchange rates on the same date Exchange differences arising from thetranslation of these accounts are recognised in the income statement Unrealised exchange gains as at thebalance sheet date are not treated as part of distributable profit to shareholders

Borrowing costs

Borrowing costs are recognised in the income statement in the year when incurred unless they arecapitalised in accordance with Vietnamese Accounting Standard No 16 "Borrowing costs" Accordingly,borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,which are assets that necessarily take a substantial period of time to get ready for their intended use orsale, are added to the cost of those assets, until such time as the assets are substantially ready for theirintended use or sale Investment income earned on the temporary investment of specific borrowingspending their expenditure on qualifying assets is deducted from the cost of those assets For specificborrowings for the purpose of construction of fixed assets and investment properties, borrowing costs arecapitalised even when the construction period is under 12 months

Taxation

Income tax expense represents the sum of die tax currently payable and deferred tax

The tax currently payable is based on taxable profit for the year Taxable profit differs from net profit asreported in the income statement because it excludes items of income or expense that are taxable ordeductible in other years (including loss carried forward, if any) and it further excludes items that arenever taxable or deductible

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