ITF

Conclusion and Outlook René Stammbach Chairman of the Finance Committee The ITF is in receipt of $25.4m in lieu of guarantees required by the licensing agreement with Kosmos. This cash is held as a security deposit against default or termination but in the absence of either is to be held separately and not for use within the business. It is therefore held as restricted cash and not included within the cash flow statement. The disruption to international competitions in 2020 meant that the Olympics, as well as the conclusion of the Davis Cup and the Billie Jean King Cup, were all postponed to 2021 and therefore the impact will also affect the 2021 result. For the Davis Cup and the Billie Jean King Cup, one year's revenue is being split over two years and is insufficient to support all costs, many of which are annual. For this reason, strict financial discipline will be maintained to prevent too significant a drain on reserves. Cash and cash equivalents (excluding investment cash deposits) have increased by $8.7m in the year to $14.2m (2019: $5.5m) as detailed in the Consolidated Cash Flow Statement. Net cash from operating activities was an outflow of $7.7m, almost exclusively due to the $7.6m net deficit before taxation, with adjustments for non-cash elements within the deficit netting off against changes in current assets and liabilities. To offset against the operational cash outflow, there were large inflows from investing activities of $17.0m, with the drawdown of Olympic deposits and liquidation of investment assets, and from financing activities of $2.5m, with the interest free loan from the IOC. Total trade and other payables decreased by $12.3m in the year to $25.3m (2019: $37.6m). Trade payables decreased by $3.9m to $2.6m and accruals decreased by $6.2m to $3.4m representing the fall in activities and expenditure during the year, particularly with no Davis Cup Finals expenditure near to the year-end as there was in 2019. Deferred income also fell by $1.7m to $18.7m as agreements with long-term sponsors to maintain cash receipts for future postponed events offset against the reduction in overall revenue. Investing income recorded in the Consolidated Income Statement shows a gross investment gain of $4.3m (2019: $8.0m) and a net gain of $4.1m after costs, giving a positive return of 7.6% (2019: $7.8m, 16.6%). The portfolio is overseen by Cambridge Associates under an advisory mandate and supervised by the ITF's Investment Advisory Panel which reports to the ITF Finance and Audit Committee and ITF Board of Directors on a regular basis. Consolidated Statement of Financial Position Net assets of the ITF Group have decreased from $57.7m at 31 December 2019 to $52.3m at 31 December 2020. Investment in information technology amounted to $2.0m in 2020 (2019: $2.7m) split between $1.9m intangible assets (software development) and $0.1m tangible assets (computer hardware). Capitalised software development includes work performed on the IPIN platform, ITF website and modernising the ITF's IT systems. Software development under construction (and therefore not amortised) is for the online coaches academy due to be launched in 2021. Derivative financial instruments of a $2.1m asset (2019: $0.7m asset) represent currency forward contract cash flow hedges and have been treated in the accounts as described in note 5(o), with the fair value adjustment arising at 31 December 2020 being taken to reserves in line with hedge accounting requirements. Further detail is provided in notes 30 and 35(e) to the 2020 was extremely challenging with continuing uncertainty caused by the global Covid-19 pandemic. Many countries continue to be severely affected and international travel has been largely curtailed. While the ITF's financial performance has suffered as a consequence, the swift actions of the executive management and agile decision-making has limited the losses. To have been so severely impacted by the global pandemic, yet to only realise a fall of $5.4m in reserves when revenues fell by $53.1m, must be seen as a good result in the circumstances. I would like to take this opportunity to thank the executive and staff for their hard work and commitment to the ITF. The ITF Reserves Policy provides for holding funds for long-term financial stability and for investment in Strategic Initiatives. The investment guidelines reflect the long-term objective and returns should therefore be viewed in this context. Financial assets of $49.7m (2019: $61.0m) represent the ITF investment portfolios. Total trade and other receivables decreased by $13.4m to $11.0m in the year (2019: $24.4m). Trade receivables reduced by $9.4m with the payment of a large annual contractual invoice just before the year-end, whereas the corresponding invoice remained outstanding in 2019, as well as a general decrease in the amount invoiced due to the reduction in revenue. In addition, contract assets decreased by $4.2m due to previous Davis Cup contracts now falling under the event licensing agreement. Despite the financial pressures caused by Covid-19, the ITF continues to build for the future and invest in Strategic Initiatives such as the ITF World Tennis Number and the ITF World Tennis Tour. Through judicious use of financial reserves and by maintaining tight control on costs, the ITF will emerge from the current crisis in a strong position and able to respond to the uncertainties inherent in the future whilst Covid-19 remains in circulation. Investing Activities 3

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