Present value of long-term provisions was calculated using a real, risk free discount rate of 2.0% (2014: 2.0%).

Provision for environment protection

The Parent Company

Due to the contamination of the Parent Company’s land and two buildings within the electrolysis plant with chemicals (mainly by mercury), which was identified based on the examination performed, the Parent Company recognised a provision for site restoration and costs of lowering content of mercury in the walls of the mentioned buildings.

When preparing the estimate of the provision it was assumed that the works would be performed until 2031. The provision was estimated at the amount of direct costs required to remove the contaminated land, transfer it to the landfill and pay the storage costs. The estimates were made taking into consideration the area of the contaminated land, depth of penetration and the expected level of contamination. The provision for treatment of buildings was estimated at the amount of costs necessary to clean the buildings from mercury to such extent, that the mercury contamination does not exceed the permitted limits and the rubble from the buildings demolition would be accepted for storage as inactive, non-hazardous waste.

The present value of the provision on 31 December 2015 amounted to PLN 16 126 thousand (31 December 2014: PLN 16 075 thousand).

In 2015, the Parent Company incurred reclamation related expenses of PLN 218 thousand (2014: nil).

Grupa Azoty PUŁAWY Group

The provisions comprise mainly:

• provision for reclamation and monitoring of landfills,
• provision for withdrawal from use of products containing asbestos,
• provision for emptying the production facilities and tanks and resulting waste management

For the provision for reclamation and monitoring of landfills in Grupa Azoty PUŁAWY it was estimated that further use of the landfill will continue for 22.5-year period and that monitoring of this landfill will continue for 30 years. Additionally, in GZNF “Fosfory” it was estimated that further monitoring of the landfill in “Wiślinka” will continue for 24 years. The obligation for reclamation and monitoring is required by law. The provision amounts to PLN 5 728 thousand (31 December 2014: PLN 10 408 thousand). In 2015, the part of provision concerning the landfill in Wiślinka of PLN 4 139 thousand was reversed. The entity resigned from the outsourced security services in favour of the electronic monitoring.

For the provision for withdrawal from use of products containing asbestos it was assumed in Grupa Azoty PUŁAWY that the expenditures will be incurred proportionally over a 16.5-year period while in GZNF “Fosfory” Sp. z o.o. it is expected that the process of asbestos removal will be completed in 2018. The obligation to remove the products containing asbestos is required by law.

For the provision for emptying the production facilities and resulting waste management it was estimated that the installations will be in further use for 22.5 years. The obligation to empty the production facilities and resulting waste management are required by law. The total value of these provisions amounts to PLN 1 684 thousand (31 December 2014: PLN 1 602 thousand).

Grupa Azoty POLICE Group

The provision for reclamation was recognised in order to cover the future costs of reclamation, monitoring and protection of surface waters for the landfills of ferrous sulphate and phosphogypsum. The value of the provision results from the expected costs to be incurred after closing the landfills and considers the time between starting and completing the landfills exploitation. As at 31 December 2015, the provision amounted to PLN 32 372 thousand (31 December 2014: PLN 32 418 thousand).

The provision for cleaning the installations from chemical substances was recognised for the activities necessary when the exploitation of particular production facilities is terminated. The provision was estimated separately for each production line based on the cost estimates prepared by the particular plants. As at 31 December 2015, the value of the provision amounted to PLN 3 338 thousand (31 December 2014: PLN 4 578 thousand).

The provision for cleaning the treatment plant reservoirs was recognised for emptying the two sedimentation reservoirs in the sewage treatment plant. The sediments from the reservoirs will be used entirely for restoration of the phosphogypsum landfill after the evacuation of phosphogypsum is completed. The value of provision was estimated based on the valuation of works necessary to excavate and transport the sediments. As at 31 December 2015, the provision amounted to PLN 10 528 thousand (31 December 2014: PLN 10 533 thousand). In 2015, the entity used the provision of PLN 1 373 thousand.

Grupa Azoty KĘDZIERZYN Group

Reclamation of land contaminated by chemicals

It was identified based on the results of land quality surveys that the acceptable contamination limits were exceeded for certain chemicals. In accordance with the environment protection law, the land contaminated above the allowed limits needs to be reclaimed so that it achieves the required standards. In 2015, the estimates of provisions for reclamation were revised based on a report prepared by Ramboll Environ. When preparing the estimate of the provision it was assumed that the works would be performed until 2030 (assumption unchanged since 2014). As at 31 December 2015, the provision for reclamation amounts to PLN 11 894 thousand (31 December 2014: PLN 16 661 thousand). The decrease of provision resulted mainly from the estimates of costs necessary to be incurred for the reclamation being lower than previously expected.

The entity recognised a provision for landfill of sewage sediments. It was assumed that the restoration works would be completed in 2016. The provision for restoration of landfills amounted to PLN 4 380 thousand (31 December 2014: PLN 4 133 thousand). In 2015, the additional provision of PLN 2 984 thousand was recognised due to the increase in the scope of works and PLN 2 728 thousand was used.

Provision for liquidation of Mercury Electrolysis Plant

The provision for liquidation costs was recognised in connection with the decision to liquidate buildings of Mercury Electrolysis Plant. The provision for costs of liquidation of Mercury Electrolysis Plant was estimated based on the assumption that restoration will be completed until 2031. The provision was estimated for buildings and constructions demolition costs and storage of waste in the landfills. In 2015, spending related to abovementioned liquidation amounted to PLN 260 thousand (PLN 421 thousand in 2014).

Provision for CO₂ emission rights

The provision is recognised for the obligation arising from the emission of pollutants and is measured as a product of the amount of rights required to be redeemed to settle the obligation and the unit cost of rights held by the Group or recognised as receivable at the reporting date. The Group is obliged to redeem the appropriate amount of emission rights by the end of April of the following year.

The information about the number of emission rights owned or recognised as receivable is presented in Note 15.1. In order to secure the amount of rights required to settle the emission for 2015 the Group entities were purchasing the rights in 2015 and entered into forward contracts with realisation by the end of April 2016.

Changes in provisions