ITF

17 5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) c) Currency Transla on Assets and liabili es in currencies other than US Dollars are translated into US Dollars at appropriate rates of exchange prevailing at the balance sheet date. Income and expenses in such currencies during the year have been translated into US Dollars at the rates of exchange prevailing at the dates of the relevant transac ons. Exchange differences arising from these transla ons are recognised in the consolidated income and expenditure statement. Sterling was converted at $1.350 /£1 at 31 December 2017 ($1.235/£1 at 31 December 2016), for all subsidiaries except Hopman Cup Pty Ltd. In the case of Hopman Cup Pty Ltd, whose ac vi es are recorded in Australian Dollars, income and expenses are converted at the average rate of exchange, US$0.766/AUS$1 (2016 – US$0.743/AUS$1), and its assets and liabili es are converted at the closing rate US$0.781/AUS$1 (2016 – US$0.721/AUS$1), for consolida on in these financial statements. The resul ng exchange differences are recognised through reserves. d) Property, plant and equipment Property, plant and equipment are stated at cost, less accumulated deprecia on. The cost of the tangible fixed assets is wri en off in equal instalments over their useful lives as follows: Improvements to leasehold property Over the remaining period of the lease or asset life (if shorter) Computers and databases 3 years Furniture and equipment, technical equipment 4 years Challenge trophies, which are presented to the winners of the ITF's compe ons, including Davis Cup and Fed Cup, are not valued. e) Inventories Inventories are valued at the lower of cost and net realisable value. Where Inventories are held for distribu on for no considera on such as development equipment, the carrying amount is held in inventory at cost and is recognised as an expense on distribu on. f) Investments and other financial assets Investments are included on the Statement of Financial Posi on on trade date. Investments are valued at their fair value, which is determined by reference to quoted market prices at the balance sheet date, with changes recognised directly in the income and expenditure statement. g) Trade and other receivables Trade and other receivables are recognised ini ally at fair value. Subsequent to ini al recogni on they are measured at amor sed cost using the effec ve interest method, less any impairment losses. Included within prepayments are balances rela ng to Davis Cup and Fed Cup adver sement banners due to be u lised in the first round of the compe ons in the subsequent year. h) Trade and other payables Trade and other payables are recognised ini ally at fair value. Subsequent to ini al recogni on they are measured at amor sed cost using the effec ve interest method. i) Financial income and expenses Financial income and expenses represent bank interest received and paid by the group, respec vely. j) Taxa on The charge for taxa on is based on the result for the year and irrecoverable withholding tax, and takes into account taxa on deferred because of ming differences between the treatment of certain items for taxa on and accoun ng purposes. Deferred tax is recognised, without discoun ng, in respect of all ming differences between the treatment of certain items for taxa on and accoun ng purposes which have arisen but not reversed by the balance sheet date, to the extent that the directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying ming differences can be deducted. NOTES (forming part of the financial statements)

• Cover