Page 66 - Learn Africa 2021 Annual Report

Learn Africa Plc
Notes to the Financial Statements (cont’d)
For the year ended 31 March 2021

2.4.10 Provisions

Provisions are recognised when there is a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation. Where the Company expects some or all of a provision to be
reimbursed, for example under an insurance contract, the reimbursement is recognised as
a separate asset but only when the reimbursement is virtually certain.

The expense relating to any provision is presented in profit or loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a
current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where
discounting is used, the increase in the provision due to the passage of time is recognised
as a finance cost.

Warranty provisions
Provisions for warranty-related costs are recognised when the product is sold or service
provided to the customer. The initial determination of the extent of the warranty provision
and recognition is based on historical experience and past trends. The initial estimate of
warranty-related costs is revised annually.

Contingent liability
Contingent liability is a possible obligation that arises from past events and whose existence
will be confirmed only by the occurrence or non-occurrence of one or more uncertain future
events not wholly within the control of the entity; or a present obligation that arises from
past events but is not recognised because it is not probable that an outflow of resources
embodying economic benefits will be required to settle the obligation; or the amount of the
obligation cannot be measured with sufficient reliability.

Contingent liability is disclosed unless the possibility of an outflow of resources embodying
economic benefit is remote. A provision for the part of the obligation for which an
outflow of resources embodying economic benefits is probable is recognised, except in the
extremely rare circumstances where no reliable estimate can be made.

Contingent liabilities are assessed continually to determine whether an outflow of economic
benefit has become probable.

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