Notes to the Group financial statements l Note 4.1

4.1 Inventories
 

Inventories mainly comprise handsets, SIM cards, accessories held for sale and consumable items.

Inventories are measured at the lower of cost and net realisable value. The cost of inventory is determined using the weighted average method. Cost comprises direct materials and where applicable, overheads that have been incurred in bringing the inventories to their present location and condition, excluding borrowing costs. Net realisable value represents the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies of hyperinflationary economies, inventories relating to these subsidiaries are measured at the lower of the restated cost and net realisable value.

  2015
Rm		     2014
Rm		  
Finished goods (handsets, SIM cards and accessories) – at cost 6 766     3 775  
Consumables 59     100  
Less: Write-down to net realisable value (1 190)     (463)  
  5 635     3 412  

Scancom Limited (MTN Ghana) has secured facilities through the pledge of its inventories amounting to R47 million (2014: R39 million) (note 6.1).

Reconciliation of write-down of inventory

  At
beginning
of the
year
Rm		 Additions1
Rm		 Reversals1
Rm		 Utilised
Rm		 Exchange
and other
movements
Rm		 At end of
the year
Rm		  
2015              
Movement in write down (463) (688) 19 33 (91) (1 190)  
2014              
Movement in write down (571) (7) 101 10 4 (463)  
1 A write-down on inventories of R669 million (2014: R94 million reversal of write down) was recognised in the current year. This amount is included in other operating expenses in profit or loss (note 2.4).