ITF

6 STRATEGIC REPORT BUSINESS REVIEW A review of the group's business is outlined in the report of the Chairman of the Finance Commi ee above. PRINCIPAL RISKS AND UNCERTAINTIES The ITF prepares and reviews its risk register on a biannual basis. The major risks iden fied in the risk register, updated in March and November 2017 and reviewed by the Finance and Audit Commi ee and the Board, include: • Top player par cipa on in the Davis Cup diminishes and significant sponsorship packages remain unsold • The poten al for a compe ng event(s) to be launched either in the same week as an ITF event or with compe ng format • Impact of the findings of the Independent Review Panel inves ga on into corrup on in tennis • Security and health and safety issues at ITF tournaments • Corrupt players, officials or "unauthorised persons" manipula ng match results for personal gain The ITF implements as many reasonable mi ga ng ac ons as possible to reduce the inherent risks within the business. DEVELOPMENT AND PERFORMANCE DURING THE FINANCIAL YEAR The sale of data rights generated $12.5m in the year (2016: $6.2m). The net income from this ac vity, a er deduc on of integrity costs, is shared with the member na ons. Income from the sale of data rights is recorded as income and the payment to the na ons recorded as an expense. POSITION AT THE END OF THE YEAR In June 2017 the Board of Directors of ITF Limited reaffirmed their agreement to a revised reserves policy which iden fied $10.5m of funding for investment in strategic ini a ves in pursuance of the objec ves of ITF2024. Throughout the period of investment prudent financial management will be maintained to ensure that reserves are not unnecessarily diminished. The overall result in 2017 sees reserves increase to $57.8m, a er the planned drawdown in support of the strategic ini a ves undertaken in the year: ICT, Communica ons, Transi on Tour implementa on, Davis Cup format review, and Marke ng. The Board remains confident that the strong balance sheet, closely managed expenditure, long term revenue contracts and further opportuni es for commercial revenues, will adequately meet the challenges ahead. The global TV rights and data rights agreements that came into effect on 1 January 2017 have significantly increased revenues and con nue un l 2021. KEY PERFORMANCE INDICATORS • Commercial - Sponsorship Income: $18.9m (2016: $19.1m) • Commercial - Broadcast Income: $13.5m (2016: $8.9m) • Commercial - Data Rights Income: $12.5m (2016: $6.2m) • Corporate Services - Opera ng Surplus: $0.5m (2016: Deficit $0.9m) • Corporate Services - Investment Por olio Return: 11.0% (2016: 6.3%) BY ORDER OF THE BOARD René Stammbach Chairman of the Finance Commi ee David Haggerty President Bank Lane, Roehampton, London SW15 5XZ 26 March 2018

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