Interfront Annual Report 2022

PART E: FINANCIAL INFORMATION 76 3. FINANCIAL REPORT (CONT.) Statement of Financial Position Current Assets increased marginally by 2.2%. Non-Current Assets decreased by 28.2%, as a result of the amortisation of the intangible assets. Current Liabilities increased by 15.9%, mainly due to an increase in payables from exchange transactions. Revenue recognition was amended to align with the revised operating model during the review period. As a result, the contra- entry resulted in the recognition of payments-in-advance from SARS. During the revision of Interfront’s finances and operating model, SARS agreed to make 12 equal payments per month to Interfront, as part of its MSA to ensure continued liquidity. Revenue-billed-in-advance represents the difference between these payments and the revenue recognised based on the stage of completion principle. Due to their inherent nature, IT projects have a high probability of running over financial years, with some deliverables only recognised in the following year and the associated revenue then recognised accordingly. The Non-Current Liabilities of the company decreased materially as a result of the temporary tax difference in IP that is still being reversed, and which was countered by the creation of a deferred tax asset due to the recognition of the revenue-billed-in-advance. The net impact of these transactions fully reversed the deferred tax liability and resulted in a minor deferred tax asset. In line with the break-even financial model, the year-on-year variance in the payment received in advance, together with the accounting deficit, resulted in a decrease in Net Assets of 9.5% to R60 million (2020/2021: R67.1 million). Interfront remains committed to being a responsible custodian of its finances, as part of the public sphere it operates in and is committed to the cost-savings initiatives issued by National Treasury. 150 000 000 100 000 000 50 000 000 0 2018 2019 2020 2021 2022 Rendering of Services 150 000 000 100 000 000 50 000 000 0 2018 2019 2020 2021 2022 Expenditure