Property, plant and equipment ("PPE")

Property, plant and equipment is maintained under the historical cost convention (at acquisition price or at the cost of production including transportation and assembly costs) as modified by the revaluation of these assets, if revalued. At various times since 1992, PPE in Azerbaijan have been revalued in accordance with Government decrees (the latest such revaluation occurred in 1996).

The indexes used for these revaluations did not properly account for the changes in the value of the Azerbaijani Manat, nor did they provide a market value for the fixed assets to which they were applied. Revaluations of property, plant and equipment are generally not required under IFRS and US GAAP, except under certain circumstances.