PLN '000 Dec 31 2015 Dec 31 2014
Finished goods 863,428 1,184,960
Semi-finished products and work in progress 319,533 556,424
Merchandise 116,801 223,540
Materials 1,936,054 1,952,205
Total 3,235,816 3,917,129
including inventories measured at:    
   cost 493,696 469,201
   net realisable value 2,742,120 3,447,928

Inventories are measured at the lower of cost or cost less write-downs to net realisable value less costs to sell.

Following a change in prices of crude oil and refining products in 2015, in H1 2015 the Group reversed inventory write-downs recognised in Q4 2014, and in Q3 and Q4 2015 the Group recognised a write-down to adjust the carrying amount of inventory to the net realisable value, in accordance with IAS 2 (see Note 19.1).

As at December 31st 2015, carrying amount of inventories securing liabilities under borrowings was PLN 2,734,698 thousand (December 31st 2014: PLN 3,330,652 thousand).

19.1 Change in inventory write-downs

PLN '000  Year ended
Dec 31 2015
 Year ended
Dec 31 2014
At beginning of period 453,409 2,919
Recognised 267,840 451,551
Exchange differences on translating foreign operations 21 1
Used (328) (892)
Reversed (453,247) (170)
At end of period 267,695 453,409
   Finished goods 62,906 200,340
   Semi-finished products and work in progress 28,712 40,913
   Merchandise 34,089 5,834
   Materials 141,988 206,322

The effect of revaluation of inventories is taken to cost of sales.

19.2 Mandatory stocks

The Group maintains mandatory stocks as required by the following acts:

  • Act on Stocks of Crude Oil, Petroleum Products and Natural Gas, and on the Rules to be Followed in the Event of Threat to National Fuel Security or Disruptions on the Petroleum Market of February 16th 2007 (Dz.U. of 2007, No. 52, item 343, dated March 23rd 2007, as amended).
  • Regulation of the Minister of Economy, Labour and Social Policy, on fuel stocks at power utility companies, dated February 12th 2003 (Dz.U. No. 39, item 338, as amended).

These regulations define the rules for creating, maintaining and financing stocks of crude oil, petroleum products and fuels at power utility companies. 

The Group’s mandatory stocks include crude oil, petroleum products (liquid fuels), LPG and coal. In the downstream segment, mandatory stocks are maintained mainly by the Parent. As at December 31st 2015, the carrying amount of mandatory stocks was PLN 1,881,494 thousand (December 31st 2014: PLN 2,243,655 thousand).

The Notes to the consolidated financial statements are an integral part of the statements.
(This is a translation of a document originally issued in Polish)