Issue link: http://itf.uberflip.com/i/1122517
STRATEGIC REPORT business review A review of the group's business is outlined in the report of the Chairman of the Finance Commi ee on page 1. 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 June and November 2018 and reviewed by the Finance and Audit Commi ee and the Board, include: ▪ The poten al for compe ng event(s) to be launched either in the same week as an ITF event or with compe ng format ▪ The risk of the partnership with Kosmos Group or the new Davis Cup format being unsuccessful ▪ Impact of the findings of the Independent Review Panel inves ga on into corrup on in tennis ▪ Top player par cipa on in the Davis Cup diminishes and significant sponsorship packages remain unsold ▪ Corrupt players, officials or "unauthorised persons" manipula ng match results for personal gain ▪ Security and health and safety issues at ITF tournaments The ITF implements as many reasonable mi ga ng ac ons as possible to reduce the inherent risks within the business. PERFORMANCE DURING THE FINANCIAL YEAR The ITF Trust made a net surplus a er taxa on on ongoing Opera ng Ac vi es of $0.1m (2017: $1.4m), a planned deficit on Strategic Ini a ve expenditure of $3.7m (2017: $1.1m) and a net deficit on the Investment Ac vi es of $1.9m (2017: surplus $5.0m) making a total deficit a er tax of $5.5m (2017: surplus $5.3m). Further details of the financial performance of the ITF Trust during the financial year can be found in the Chairman of the Finance Commi ee's Report on page 1. POSITION AT THE END OF THE YEAR In June 2017 the ITF Board of Directors 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 2018 sees equity decrease to $49.5m, a er the planned drawdown in support of the Strategic Ini a ves undertaken in the year, and the nega ve result of the investment por olio. 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 Davis Cup Licence Agreement with Kosmos signed in August 2018 for a 25-year period sees significantly increased revenues for 2019 and beyond which is annually linked with infla on. This guarantees the ITF's main income streams for a significant length of me. key performance indicators ▪ Commercial - Sponsorship Income: $19.5m (2017: $18.9m) ▪ Commercial - Broadcast Income: $14.4m (2017: $13.5m) ▪ Commercial - Data Rights Income: $12.7m (2017: $12.5m) ▪ Corporate Services - Opera ng Surplus: $0.2m (2017: Surplus $1.6m) ▪ Corporate Services - Investment Por olio Return: nega ve 4.2% (2017: posi ve 11.0%) by order of the board René Stammbach Chairman of the ITF Finance Commi ee David Haggerty Chairman Commi ee Bank Lane, Roehampton, London, SW15 5XZ, UK 18 March 2019 ITF ANNUAL REPORT AND FINANCIAL STATEMENTS / 04