ITF

v) Technical & sundry income Technical income is derived from testing tennis equipment and is recognised in accordance with the terms of the agreement and the accounting period to which it relates. Sundry income is derived mainly from rent received and is recognised as per the terms of the lease and the accounting period to which it relates. vi) Olympic income Olympic income, net of directly attributable expenses, is released to the income and expenditure statement over the four years of the Olympiad, starting in the year the games are held. Note 31 provides further information on Olympic income. vii) Investment income/expense and gains/losses on investments Investments are valued at their fair value, which is determined by reference to quoted market bid prices at the balance sheet date. Valuations are provided by the investment managers. Gains or losses arising from this valuation are shown in the consolidated income and expenditure statement in accordance with IAS 39.9. d) Inventories Inventories are valued at the lower of cost and net realisable value. e) Investments & other financial assets Investments are included on the Balance Sheet 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. f) Trade and other receivables Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses. g) Trade and other payables Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method. Interest is recognised in the income statement on an accruals basis, and dividend income is recognised when the ITF's right to receive payment is established. h) Financial income and expenses Financial income and expenses represent bank interest received and paid by the Group, respectively. b) Currency translation Assets and liabilities in currencies other than US Dollars are translated into US Dollars at appropriate rates of exchange ruling 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 ruling at the dates of the relevant transactions. Exchange differences arising from these translations are recognised in the consolidated income and expenditure statement. i) Taxation The charge for taxation is based on the result for the year and irrecoverable withholding tax, and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Sterling was converted at $1.615/£1 at 31 December 2012 ($1.545/£1 at 31 December 2011), for all subsidiaries except Hopman Cup Pty Ltd. In the case of Hopman Cup Pty Ltd, whose activities are recorded in Australian Dollars, income and expenses are converted at the average rate of exchange, US$1.035/AUS$1 (2011: US$1.032/AUS$1), and its assets and liabilities are converted at the closing rate, US$1.037/AUS$1 (2011: US$1.017/AUS$1), for consolidation in these financial statements. The resulting exchange differences are recognised through reserves. c) Property, plant & equipment Property, plant and equipment are stated at cost, less accumulated depreciation. The cost of the tangible fixed assets is written off in equal instalments over their useful lives as follows: Improvements to leasehold property Computers and Databases Furniture and Equipment Technical Equipment Over the remaining period of the lease or asset life (if shorter) 3 years 4 years 4 years Challenge trophies, which are presented to the winners of the ITF's competitions, including Davis Cup and Fed Cup, are not valued. Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation and accounting 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 timing differences can be deducted. j) Impairment of financial assets In relation to trade receivables, a provision for impairment is made when there is objective evidence, such as the probability of insolvency or significant financial difficulties of the debtor, that the ITF will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is reduced through use of an allowance account. Impaired debts are derecognised when they are assessed as uncollectable. In addition to this, the ITF fully provides for all debts more than one year overdue, except where those older debts are specifically considered to be recoverable. k) Operating leases Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognised as an expense in the income and expenditure statement on a straight line basis over the lease term. l) Cash & 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 purpose of the consolidated cash flow statement, cash and cash equivalents are net of any outstanding bank overdraft. ITF FINANCIAL STATEMENTS 49

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