Notes to the group financial statements l Note 6.3

6.3 Provisions
 

A provision is recognised when there is a present legal or constructive obligation as a result of a past event for which it is more likely than not that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. A provision to pay a levy is not recognised until the obligating event specified in the legislation occurs, even if there is no realistic opportunity to avoid the obligation. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expected outflow of resources required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as a finance cost.
 
   At the 
beginning 
of the 
year 
Rm 		 Additions 
Rm 		 Reversals 
Rm 		 Utilised 
Rm 		 Exchange 
and 
other 
movements1
Rm 		 At the 
end 
of the 
year 
Rm 		   
2017                      
Non-current                      
Decommissioning provision  245  38  –  (13) (26) 244    
Other provisions  135  26  (18) (7) 29  165    
   380  64  (18) (20) 3  409    
Current                      
Bonus provision  622  928  (67) (423) (92) 968    
Decommissioning                      
provision  2  –  –  –  (1) 1    
Licence obligations  130  –  –  (39) –  91    
Other provisions  1 475  621  (472) (374) (280) 970    
   2 229  1 549  (539) (836) (373) 2 030    
1 Includes the effect of hyperinflation.
   At the 
beginning 
of the 
year 
Rm 		 Additions 
Rm 		 Reversals 
Rm 		 Reclassification 
to 
financial 
instruments 
Rm 		 Utilised 
Rm 		 Net 
monetary 
gain 		 Exchange 
and other 
movements1
Rm 		 At  the 
end  of 
the  year 
Rm 		   
2016                            
Non-current                            
Decommissioning provision  293  81  (112) –  –  –  (17) 245    
Licence obligations  77  –  –  –  –  –  (77) –    
Nigeria provision for regulatory fine  4 104  –  –  (4 237) –  –  133  –    
Other provisions  150  32  (27) –  (20) –  –  135    
                             
   4 624  113  (139) (4 237) (20) –  39  380    
Current                            
Bonus provision  790  646  (263) –  (403) 1  (149) 622    
Decommissioning provision  6  –  –  –  –  –  (4) 2    
Licence obligations  94  –  –  –  (87) –  123  130    
Nigeria provision for regulatory fine  5 183  –  –  (1 421) (3 983) –  221  –    
Other provisions  1 920  553  (909) –  (205) –  116  1 475    
   7 993  1 199  (1 172) (1 421) (4 678) 1  307  2 229    
1 Includes the effect of hyperinflation.

Bonus provision

The bonus provision consists of a performance-based bonus, which is determined by reference to the overall Group entity’s performance with regard to a set of predetermined key performance measures. Bonuses are payable annually after the group annual results have been approved.

Decommissioning provision

This provision relates to the estimate of the cost of dismantling and removing an item of property, plant and equipment and restoring the site on which the item was located to its original condition. The group provides for the anticipated costs associated with the restoration of leasehold property to its original condition at inception of the lease, including removal of items included in property, plant and equipment that are erected on leased land.

The group only recognises these decommissioning costs for the proportion of its overall number of sites for which it expects decommissioning to take place. The expected percentage has been based on actual experience in the respective operations.

Licence obligations

The licence obligations provision represents the estimated costs to be incurred in fulfilling the Universal Services Obligation (USO) in South Africa. USOs are governed by the Electronic Communications Act.

Other provisions

The group is involved in various regulatory and direct and indirect tax matters specific to the respective jurisdictions in which the group operates. These matters may not necessarily be resolved in a manner that is favourable to the group. The group has therefore recognised provisions in respect of these matters based on estimates and the probability of an outflow of economic benefits and should not be construed as an admission of legal liability.

Notes to the group financial statements l Note 6.3