Interfront Annual Report 2022

PART E: FINANCIAL INFORMATION 74 3.2 Statement of Financial Performance In line with the modified cash break-even finance model, Interfront ended the year with an accounting deficit and cash surplus (nett deficit: R6 383 966, 2020/2021: R8 769 728). In addition to a large staff turnover, which resulted in a lower employee cost than expected, the ongoing national lockdown resulted in some savings on variable expenses and the deferral of others, which contributed to a lower nett deficit. 3. FINANCIAL REPORT (CONT.) 2018 2019 2020 2021 2022 SUPPORT / DEVELOPMENT SPLIT (%) In the year under review, the classification of ‘Rendering of Services’ was adjusted to reflect the spirit of the change in the operating model better, and figures from the prior year were adjusted accordingly (refer to note 30 to the Annual Financial Statements). Overall, the rendering of services increased marginally from the prior year, attributable to the inflation increase offset by a decrease in the average number of staff, our key revenue generator. Interest income decreased by 10%, due to the previous repayment of the Shareholder’s loan in late 2020 and the associated decrease in the average cash balance. Employee costs ended in line with the year before, a decrease in real terms. Despite an increase in average staff salaries of 5.72% (R62 791, 2020/2021: R59 396), the average staff number declined by 6.76% (109.3, 2020/2021: 117.2), owing to high employee turnover. To compensate for the loss of internal development skills, Interfront continues to use external developers. However, the cost was decreased by 4.8%. In view of the significant vacancy rate among our development staff, we expect to continue using these services for some time to come. Administrative expenditures increased by 10.5% in the year under review, in part due to an increase in recruitment fees associated with countering staff losses. In addition, staff visited Interfront offices more frequently after some lockdown restrictions were lifted, resulting in a higher level of activity at Interfront offices. Auditors’ remuneration decreased by 25.9%, mainly as a result of the timing of the planned internal audit activities. Due to the volatility of the rand, a marginal forex loss was accounted during the year under review. Due to the limited risk currently associated with the foreign revenue, we do not hedge against future exchange rate fluctuations.