Note

* Financial information restated as presented in point 2.3 of the notes to the consolidated financial statements.

Present value of long-term provisions was calculated using a real, risk free discount rate of 2.2% (2015: 2.0%).

The Parent Company

Provision for environment protection

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 2016 amounted to PLN 16 946 thousand (31 December 2015: PLN 16 126 thousand).

In 2016, the Parent Company incurred reclamation related expenses of PLN 203 thousand (2015: PLN 218 thousand).

Grupa Azoty PUŁAWY

Provision for environment protection

The provisions comprise:

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

For the provision for reclamation of landfills it was estimated that further use of the landfill will continue for 21.5-year period and that monitoring of this landfill will continue for 30 years. For the provision for withdrawal from use of products containing asbestos it was assumed that the expenditures will be incurred proportionally over a 15.5-year period. For the provision for emptying the production facilities and resulting waste management it was estimated that the installations will be in further use for 21.5 years.

The obligations for reclamation and monitoring of landfills, removal of the products containing asbestos and emptying the production facilities and resulting waste management are required by law.

The present value of the provisions as at 31 December 2016 amounts to PLN 3 047 thousand (31 December 2015: PLN 3 040 thousand).

Grupa Azoty POLICE

Provision for environment protection

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.

It was assumed that the sediments from the ground settlers located in the sewage treatment plant will be used for the partial rehabilitation of phosphogypsum stacks, which will significantly reduce the costs of rehabilitation of the phosphogypsum stack area once the evacuation of the phosphogypsum is completed. The extraction and transportation costs were estimated on the basis of the valuation of related work. The costs of monitoring and protecting ground water were estimated on the basis of the average costs incurred in the recent years, taking into consideration their reduction resulting from the passage of time. As at 31 December 2016, the value of the provision amounted to PLN 38 247 thousand (31 December 2015: PLN 42 900 thousand). Decrease in the provision resulted from the increase in the discount rate and from the partial reversal due to the change in the estimate of costs to be incurred.

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 2016, the value of the provision amounted to PLN 3 516 thousand (31 December 2015: PLN 3 318 thousand).

Other provisions

In 2016, a provision of PLN 9 411 thousand was recognised for technical consultancy concerning the deliveries of phosphates from Senegal. The amount of liabilities and justification for realisation of the liabilities are considered doubtful.

Grupa Azoty KĘDZIERZYN

Provision for environment protection

It was identified based on the results of land quality surveys that the acceptable contamination limits were exceeded for certain chemicals. When preparing the estimate of the provision it was assumed that the works would be performed until 2030. The amount of provision for land reclamation is revised based on the works performed in certain locations. As at 31 December 2016, the present value of the provision for land reclamation amounted to PLN 12 551 thousand (31 December 2015: PLN 11 894 thousand). The increase in the provision resulted mainly from the proposed increase in the scope of work as compared to the previous estimates.

In recent years, the entity recognised a provision for reclamation of landfill of sewage sediments. The present value of the provision amounted to PLN 899 thousand (31 December 2015: PLN 4 380 thousand). In 2016, the company incurred the reclamation expense of PLN 3 577 thousand partially using the provision. The remediation works are expected to complete in 2017.

Changes in provisions

* Financial information restated as presented in point 2.3 of the notes to the consolidated financial statements.