The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct costs and fixed production overheads, but excludes interest charges. Fixed production overheads are allocated on the basis of normal capacity.

Net realisable value represents the estimated selling price in the ordinary course of business less applicable selling expenses. Write-downs to net realisable value and inventory losses are expensed in the period in which the write-downs or losses occur.

Inventory is presented as non-current when it is not expected to be sold or used within the normal business operating cycle.

Trade receivables

Trade receivables are amounts due from customers for the sale of goods and services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets. Refer note 16.1 for further accounting policies relating to financial assets at amortised costs.

Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

6.2.2 INVENTORIES

No inventories were pledged as security for liabilities in 2020 nor 2019.

6.2.3 TRADE AND OTHER RECEIVABLES

6.2.3.1 Impairment allowances and write-offs

Trade and other receivables are stated after the following allowances for impairment:

Trade and other receivables are stated after the following write-offs recognised in profit or loss:

For a detailed age analysis of the trade and other receivables refer note 16.3.3.4.2.

6.2.4 TRADE AND OTHER PAYABLES

¹ Relates to retention creditors.
² Includes an amount of R296 million owing to Arnot OpCo in relation to the environmental rehabilitation funds which are being held in trust on their behalf.