2020 ITF Annual Report and Financial Statements

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Income from the Olympic Games, recognised in the Consolidated Income Statement over the four-year period of the Olympiad, amounts to nil in 2020 (2019: $5.8m) due to the postponement of Tokyo 2020 Olympic Games. Instead, the IOC granted a loan of $3.0m to assist with cashflow but as this was a loan it is not recognised as revenue. Other Development income comprises funding for regional 12-and-under team competitions and other funding such as grants towards promoting gender equality with the ITF's 'Advantage All' campaign. For the 12-and-under competitions, revenue was reduced by $0.6m as the later stages of the events were cancelled due to Covid-19. The ITF World Tennis Number project, managed by the Development department, remains ongoing and is key to giving our member nations the means to identify and grow participation levels, while also providing meaningful ratings to recreational and professional players alike. R&D tax credits for costs incurred since 2018 have been claimed, resulting in a reduction in the project's costs by $0.7m. The expenditure on Strategic Initiatives from 2017 to 2020 (including capital expenditure) is $11.9m which includes $1.2m for the ITF World Tennis Number approved in 2020 in addition to the $10.5m agreed by the Board in 2017. After allowing for the tax rebate associated with the WTN, total expenditure falls within the amount approved. Presidential and Communications department expenditure fell by $1.4m to a total of $4.9m in 2020 (2019: $6.3m) as the majority of Board meetings, committee meetings and the Annual General Meeting were conducted online and expenditure on strategic projects was reduced. To alleviate the impact of Covid-19 on the tennis community, the Board approved $1.2m of funding paid to tennis players and National Associations to support them during the pandemic. Operating Expenditure Operating expenditure for 2020 was $44.7m (2019: $86.4m). As with operating income, this is a significant decrease from 2019 reflecting the curtailment of activities. Continuing projects include the digital video and photo archive projects within the Commercial and Presidential and Communications departments respectively. Professional Tennis costs decreased by $29.2m to $20.9m (2019: $50.1m). Participation payments made to nations who competed in the early rounds of the Davis Cup and the Billie Jean King Cup amounted to $7.0m and $2.9m respectively. The remaining rounds of both competitions were postponed to 2021. Tennis Development expenditure decreased by $7.1m to $6.0m in 2020 (2019: $13.1m) as Development activities and programmes were severely impacted by Covid-19. Many programmes were put on hold and players were unable to travel and play at tournaments. The ITF is resolute in its ambition to resume all programmes and activities as soon as restrictions are lifted. Commercial costs decreased by $1.7m in 2020 to $1.5m (2019: $3.2m) reflecting low activity levels in 2020, for example activation costs were minimal as none of the major events went ahead. Finance and Administration costs decreased slightly from $5.2m to $4.9m due to significant savings on premises costs and staff costs, offset by IT projects transitioning from Strategic Initiatives to business as usual. A small foreign exchange gain of $0.1m was recognised in 2020 (2019: gain of $0.6m). Strategic Initiatives Strategic Initiative projects are directly related to delivering the objectives of ITF2024, but are not ongoing or normal activities. In June 2017, the Board identified $10.5m of funding for these projects from reserves. Strategic Initiatives totalled $2.5m in 2020 before tax rebates (2019: $3.8m). Strategic Initiatives expenditure has reduced as several projects were either completed or transitioned to business as usual at the beginning of the year, including the Billie Jean King Cup Finals in the Professional Tennis Department, and the launch of the improved IPIN system and ITF Tennis website. For these latter two projects, capitalised expenditure incurred over the past three years gives rise to $1.0m of depreciation and amortisation. Strategic spending of $1.0m remains within fixed assets at the end of the year. Integrity, Science and Technical expenditure fell by $2.6m to a total of $4.8m in 2020 (2019: $7.4m). Anti-doping costs decreased by $2.4m due to the suspension of professional tours and therefore reduced testing, and these costs are offset against decreased income as referred to above. Staff costs, included within each department, reduced from $12.8m to $10.3m. Around $0.5m of this can be attributed to a favourable movement in the USD-GBP FX rate with the remaining $2.0m being attributable to staff taking voluntary reductions in pay and benefits, utilisation of the UK Government's Coronavirus Job Retention Scheme, and a reduction in headcount. Taxation shows a net rebate of $0.6m which includes R&D tax credits claimed against expenditure on the ITF World Tennis Number project and this has been designated as a Strategic Initiative rebate accordingly. The taxation charge in 2019 arose from the settlement fee for the Hopman Cup licensing agreement. Payments to nations for the share of data rights (contained within data sales activity costs in note 9 of the financial statements) was fixed at the same level per tournament as in 2019 to allow tournament organisers to plan in the uncertain environment, but with far fewer tournaments the total distribution decreased by $6.3m. Integrity costs, which are funded by data rights revenues and included in other professional tennis costs, showed a year-on-year increase of $0.3m. This reflects increased investment by the tennis governing bodies to enhance the capabilities of the Tennis Integrity Unit and implement additional measures required by the Independent Review into integrity in tennis. 2

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