in PLN millions, unless otherwise stated
The Group measures inventories at cost, not higher than the sales price less costs of completing production and costs to sell.
Any differences in the value of finished goods constitutes a write-down and is recognised in the costs of sold products.
The costs of inventories of finished goods, half-finished goods and work in progress include costs directly related to the production and variable and fixed indirect costs of production, assigned respectively. Fixed indirect costs of production are allocated on the basis of the normal level of production capacity utilisation.
Inventory disposals are measured at weighted average cost.
In the consolidated financial statements the volume of those inventories of the KGHM INTERNATIONAL LTD. Group which arise from the leaching process, is determined based on the estimated recovery of metal from ore. The nature of the process of leaching copper from ore limits the precision of monitoring the level of inventories arising during this process. In subsequent reporting periods, adjustments are made to the estimated recovery of copper from the leaching of ore in a given reporting period to the level of production achieved in the subsequent period.
As at 31 December 2020 the provisionally-set value of inventories amounted to PLN 77 million (as at 31 December 2019, PLN 74 million).
| As at 31 December 2020 |
As at 31 December 2019 |
|
|---|---|---|
| Materials | 1 251 | 844 |
| Half-finished goods and work in progress | 2 482 | 2 790 |
| Finished products | 580 | 926 |
| Merchandise | 146 | 181 |
| Total carrying amount of inventories | 4 459 | 4 741 |
| [Note 4.4] Write-down of inventories during the reporting period | from 1 January 2020 to 31 December 2020 |
from 1 January 2019 to 31 December 2019 |
|---|---|---|
| Write-down recognised in cost of sales | (129) | (38) |
| Write-down reversed in cost of sales | 29 | 38 |
| Maturities of inventories | As at 31 December 2020 |
As at 31 December 2019 |
|---|---|---|
| Maturity over the 12 months from the end of the reporting period | 269 | 283 |
| Maturity of up to 12 months from the end of the reporting period | 4 190 | 4 458 |
The value of inventories with a maturity of over 12 months, mainly includes stand-by inventories of materials and spare parts to maintain production continuity and packages of spare parts under contractual obligations in the Parent Entity and in the KGHM INTERNATIONAL LTD. Group and the finished rhenium product. Due to the collapse of the rhenium market after 2011, the demand for this product from the largest recipients dropped drastically and the period in which the inventory of rhenium in the Parent Entity will be sold was extended, while maintaining its functional properties. According to the plans to sell rhenium, the inventory should gradually decrease in the coming years.