ITF

NOTES (CONT.) (FORMING PART OF THE FINANCIAL STATEMENTS) 6. Significant accounting judgements, estimates and assumptions (continued) Judgements (continued) Olympic income and IFRS 15 application Estimates Provisions Leases 7. Sponsorship, competition and television 2020 2019 $000 $000 Davis Cup licence fee 10,277 40,300 Billie Jean King Cup hosting fee 5,000 - Sponsorship rights 2,788 5,669 Receipts from events 2,241 5,844 Hopman Cup income 230 1,995 Media rights and licensing income 613 3,036 21,149 56,844 The incremental borrowing rate of ITF Licensing (UK) Ltd as the lessee of the lease of the head office building has been estimated using the build-up approach. Sensitivity analysis shows that this does not have a material impact on the financial statements. The key sources of estimation uncertainty at the balance sheet date, that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, relate to: The provision for dilapidations has been calculated using an estimate for the costs that would be payable under the terms of the existing lease. The group recognised no Olympic income in the year due to the postponement of the Tokyo 2020 Summer Olympic Games (Tokyo 2020). In 2019, revenue was recognised for a contract relating to the Rio de Janeiro 2016 Summer Olympic Games (Rio 2016) with the International Olympic Committee (IOC). The contract takes the form of the Olympic Charter which sets out key performance obligations of directing the tennis event at Rio 2016 and to develop and grow the sport of tennis worldwide. The group has assessed that the first obligation is satisfied at a point in time at the conclusion of Rio 2016 and that the second obligation is satisfied evenly over a period of time. The group allocated the transaction price to the control and direction of the tennis event at Rio 2016 using the cost plus margin approach, and to the development of the sport of tennis using the residual approach. The group has determined that the obligation to develop the sport of tennis relating to the contract for Rio 2016 begins on 1 January 2016 and ends on 31 December 2019 and is satisfied evenly over this period. 1 January 2016 is the point at which the group has assessed that all the conditions within IFRS 15 [9(a)-(e)] are met and so is the point at which IFRS 15 is applied to the contract. The group has made three critical judgements for the accounting treatment of this contract: identification of the performance obligations; allocation of the transaction price; and the identification of the beginning and period of the contract. Each judgement could have a material effect on these financial statements. The group is confident that each judgement is supported by the fact pattern of the contract with the IOC, the IOC's external publicly available communications, and the point at which the group has confidence in the commercial substance of the contract. The group is also confident that the resulting accounting treatment results in a revenue recognition profile that provides the greatest level of understandability to the users of these financial statements and gives a true and fair view of the state of the group's affairs for the period of the four-year Olympiad from 2016 to 2019. 19

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