ITF

f) 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. g) Investments and financial assets held at fair value through profit or loss (FVPL) Investments are included on the Statement of Financial Posi on on trade-date, the date on which the group commits to purchase or sell the asset. Investments are valued at their fair value, which is determined by reference to quoted market prices at the balance sheet date (classified as level 1 in the fair value hierarchy), with changes recognised directly in the income and expenditure statement. Transac on costs of financial assets carried at FVPL are expensed in profit or loss. The group has applied IFRS 9 retrospec vely. However, there are no changes to the accoun ng treatment of Investments and financial assets held at FVPL. h) 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. i) Impairment of financial assets Impairment of financial assets held at FVPL is not considered. For impairment of trade receivables, since 1 January 2018 the group applies the simplified approach permi ed by IFRS 9, which requires expected life me losses to be recognised from ini al recogni on of the receivables, see note 34 for further details. j) 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. k) Financial income and expenses Financial income and expenses represent bank interest received and paid by the group, respec vely. l) 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. m) Opera ng leases Leases where the lessor retains substan ally all the risks and benefits of ownership of the asset are classified as opera ng leases. Opera ng lease payments are recognised as an expense in the income and expenditure statement on a straight-line basis over the lease term. n) Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand and short term deposits with an original maturity date of three months or less. For the consolidated cash flow statement, cash and cash equivalents are net of outstanding bank overdra s. o) Deriva ve financial instruments and hedging The group uses deriva ve financial instruments such as forward currency contracts to hedge its risks associated with foreign currency fluctua ons. Such deriva ve financial instruments are ini ally recognised at fair value on the date at which a deriva ve contract is entered into and are subsequently restated at fair value. Deriva ves are carried as assets when the fair value is posi ve and as liabili es when the fair value is nega ve. The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. For the purpose of hedge accoun ng, hedges u lised by the ITF are classified as cash flow hedges. Cash flow hedges are when hedging exposure to variability in cash flows that is either a ributable to a par cular risk associated with: a recognised asset or liability; a highly probable forecast transac on; or the foreign currency risk in an unrecognised firm commitment. ITF ANNUAL REPORT AND FINANCIAL STATEMENTS / 17 Notes (Forming part of the financial statements) 5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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