ITF

NOTES (CONT.) (FORMING PART OF THE FINANCIAL STATEMENTS) 35. Financial instruments (continued) (a) Fair values of financial instruments (continued) Recurring fair value measurements Fair value 2020 Fair value 2019 hierarchy $000 hierarchy $000 Financial assets Financial assets at fair value through profit or loss Level 1 49,658 Level 1 61,010 Hedging derivatives - foreign currency forwards Level 2 2,068 Level 2 718 51,726 61,728 Financial liabilities Hedging derivatives - foreign currency forwards Level 2 - Level 2 - (b) Credit risk Impairment of financial assets Expected Gross carrying Loss Expected Gross carrying Loss loss amount allowance loss amount allowance 2020 2020 2020 2019 2019 2019 % $000 $000 % $000 $000 Not past due 3.75% 3,333 (125) 1.11% 10,772 (120) Past due (0-30 days) 0.00% 45 - 0.27% 1,860 (5) Past due (31-180 days) 0.65% 770 (5) 0.70% 2,146 (15) Past due (more than 180 days) 10.69% 1,366 (146) 33.87% 375 (127) 5,514 (276) 15,153 (267) The group is also exposed to credit risk in relation to investments that are measured at fair value through profit or loss. The maximum exposure at the end of the reporting period is the carrying amount of these investments: $49.4m (2019: $61.0m). The expected loss rates are based on the payment profiles of sales over a period before the balance sheet date and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. On that basis, the loss allowance as at 31 December 2020 and 2019 was determined as follows: Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include failure to engage in repayment plans and failure to make payments greater than 365 days past due. Impairment losses are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item. There were no transfers between hierarchy levels. Level 1 - financial instruments traded in active markets is based on quoted market prices. Level 2 - financial instruments not traded in an active market is determined using valuation techniques maximising the use of observable market data. For the foreign currency forwards observable market data is the present value of future cash flows based on the forward exchange rates at the balance sheet date. Level 3 - if one or more significant inputs is not based on observable market data. Credit risk is managed on a group basis. For banks and financial institutions, only independently rated parties with a minimum rating of 'A' are accepted. For some trade receivables the group may obtain security in the form of guarantees, deeds of undertaking or letters of credit which can be called upon if the counterparty is in default under the terms of the agreement. The group has trade receivables that are subject to the expected credit loss model. While cash and cash equivalents and contract assets (accrued income) are also subject to the impairment requirements of IFRS 9, the identified impairment loss was immaterial. The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The group trades only with national tennis associations and recognised, creditworthy third parties and its debtor balances are monitored on an ongoing basis with a result that the group's exposure to bad debts is not significant. The maximum exposure is the carrying amount as disclosed in section (a), above. Based on the contractual conditions trade and other payables are due within one month. 29

• Cover