ITF

REPORT OF THE CHAIRMAN OF THE ITF FINANCE COMMITTEE (CONTINUED) consolidated statement of financial position Net assets of the ITF Group have decreased from $57.8m at 31 December 2017 to $49.5m at 31 December 2018. Investment in Informa on Technology amounted to $2.1m in 2018 when combining the intangible so ware development and tangible addi ons in the year (2017: $1.2m). As discussed in the Strategic Ini a ve sec on above, the large increase reflects the significant investment in the IPIN system, website, and online coaches academy. Total trade and other receivables decreased by $3.9m to $12.7m (2017: $16.6m) driven by a large invoice in debtors for 2017 not being repeated this year. Financial assets held at fair value through profit or loss represent the ITF investment por olios and Olympic deposits. The value of the investment por olios (excluding the Olympic deposits) at 31 December 2018 was $47.3m (2017: $49.9m), a decrease of $2.6m. Of this decrease, $2.0m represents the net loss of the por olio during the year, and $0.6m represents the par al withdrawal of the $2.8m temporary working capital injec on deposited in 2017 to fund ming differences in the transi oning process to new fund management arrangements. The remaining $2.2m is yet to be drawn back down into working capital. The ITF Reserves Policy provides for holding funds for long term financial stability and for investment in Strategic Ini a ves. The investment guidelines reflect the long term objec ve and returns should therefore be viewed in this context. Olympic deposits are held in short-term investments and high quality bonds which will mature and be u lised evenly over the Olympic cycle to meet development expenditure commitments. Cash and cash equivalents (excluding investment por olio cash deposits) have increased by $14.6m to $28.8m (2017: $14.2m). Short-term deposits within the investment por olio have decreased $10.6m to close to nil resul ng in a net overall increase in cash of $4.1m. Further detail can be found in the consolidated statement of cash flows, with net cash inflows from opera ng ac vi es totalling $10.4m (2017: $5.4m), and a net cash ou low from inves ng ac vi es of $6.1m (2017: inflow $6.6m). Total trade, other payables and deferred income (current and non-current combined) increased by $9.0m to $54.1m (2017: $45.1m). Olympic deferred income reduced by $5.8m represen ng the recogni on of the penul mate year of income from the 2016 Olympic Games in Rio. This is offset by a $13.1m increase in receipts received in advance, driven by a significant advance payment received upon signing of the Davis Cup Licence Agreement with Kosmos Group which is to be offset against the first two quarters' licence fees for 2019. Deriva ve financial instruments of a $1.6m liability (2017: $1.2m asset) represent currency forward contract cash flow hedges and have been treated in the accounts as described in note 5(o), with the fair value adjustment arising at 31 December 2018 being taken to reserves in line with hedge accoun ng requirements. Further detail is provided in note 29 and 34(e) to the financial statements. conclusion and outlook Overall, the financial performance of the ITF remains posi ve with ongoing Opera ng Ac vi es genera ng a surplus in the year and the decrease in accumulated reserves arising from a planned drawdown to fund substan al investment in ITF2024 Strategic Ini a ves. Investment losses arising from exposure to vola lity in investment markets experienced in the fourth quarter of 2018 have been recovered in the first quarter of 2019. I would like to take this opportunity to thank the execu ve and staff for their hard work and commitment to the ITF. René Stammbach Chairman of the ITF Finance Commi ee ITF ANNUAL REPORT AND FINANCIAL STATEMENTS / 03

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