Integrated Annual Report of LOTOS Capital Group 2016

17. Inventories

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Dec 31 2016 Dec 31 2015
Finished goods 833,602 863,428
Semi-finished products and work in progress 431,699 319,533
Merchandise 149,236 116,801
Materials 1,919,054 1,936,054
Total 3,333,591 3,235,816
including inventories measured at:
     cost 3,309,542 493,696
     net realisable value 24,049 2,742,120

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

In H1 2016, the Group reversed PLN 262,680 thousand of write-downs on inventories of crude oil and refining products, which had been recognised in 2015 due to changes in quoted prices of crude oil and refining products. The write-downs in 2015 had been made to bring the value of the inventories as at December 31st 2015 to their net realisable value. As at December 31st 2016, inventories of crude oil and refining products were carried at cost.

As at December 31st 2016, inventories securing liabilities under bank borrowings were valued at PLN 2,801,263 thousand (December 31st 2015: PLN 2,734,698 thousand.

17.1 Change in inventory write-downs

2016 2015
At beginning of period 267,695 453,409
Recognised 18,582 267,840
Exchange differences on translating foreign operations 33 21
Used (1,281) (328)
Reversed (282,972) (453,247)
At end of period 2,057 267,695

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

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