ITF Annual Report and Financial Statements 2021

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ITF Trust Annual Report and Financial Statements 2021 3 As first reported in the 2020 ITF Annual Report, the finances of the ITF have been nega vely affected by Covid-19 and its impact on tennis at all levels and throughout the world. The financial result for 2021 reflects the con nua on of the financial consequences experienced in 2020 with the postponement of the Davis Cup and the Billie Jean King Cup. The revenues from those events, which normally represent a significant propor on of total annual income, have been reduced and spread over two years. Despite costs being cut wherever possible this has led to an unavoidable mismatch between revenues and costs, as many costs are fixed and annual. As a consequence of this reduc on in income the consolidated financial statements of the ITF Trust ('ITF') record a deficit of $5.5m a er Strategic Ini a ve expenditure, inves ng ac vi es and tax (2020: $6.9m deficit). These financial statements make a dis nc on between Opera ng ac vi es, Strategic ac vi es and Inves ng ac vi es. Opera ng ac vi es represent the ongoing ac vi es of the ITF as dis nct from Strategic ac vi es which cons tute discrete projects aimed specifically at delivering the objec ves of the ITF2024 strategy. Inves ng ac vi es represent the performance of the investment por olios which underpin the ITF reserves. The result comprises a $8.3m deficit from opera ng ac vi es a er tax (2020: $9.2m deficit); $1.3m expenditure on Strategic Ini a ves a er tax (2020: $1.9m); and a $4.0m surplus from inves ng ac vi es (2020: $4.1m). The impact of the overall deficit of $5.5m is compounded by a nega ve revalua on of cash flow hedges of $2.2m and foreign exchange transla on differences of $0.1m decreasing total reserves to $44.4m as at 31 December 2021 (2020: $52.3m). Despite this reduc on, reserves remain higher than the minimum level considered acceptable by the Board, which con nues to believe that this represents a strong financial posi on considering the obvious challenges of the pandemic and its effect on tennis over the past two years. Opera ng Income Con nued disrup on to ac vi es caused Opera ng income for 2021 to remain suppressed, but it increased from $35.6m in 2020 to $66.6m in 2021. In line with 2020, and as evidenced in the 2020 accounts, the largest impact has been on Interna onal Compe ons; 2021 saw the conclusion of the Davis Cup and Billie Jean King Cup compe ons which had started in 2020 but were postponed. Not only did this have the impact of spreading one year's revenue over two years, but associated challenges to commercial revenue streams also contributed to an overall reduc on. Accordingly, the Davis Cup licence fee recognised in 2021 is $19.7m (2020: $10.3m) and the combined revenues over the two years totalled $30.0m, a $10.0m decrease from the amount recognised in 2019. The inaugural edi on of the rebranded Billie Jean King Cup Finals took place in November 2021 in Prague, Czech Republic. While undoubtedly the compe on was a great success, the termina on of the original contract to host the event in Budapest resulted in only $3m of revenue being recognised in 2021 (2020: $5m), which was the release of deferred income from the previous year. Commercial revenues from sponsorship and media rights retained by the ITF amounted to $8.2m in 2021 (2020: $3.4m) generated from the Davis Cup World Group and zonal group events, and the Billie Jean King Cup compe on through our partnerships with BNP Paribas and Rosland Capital; from the Wheelchair Tennis Tour, Wheelchair Masters events and World Team Cup through key partnerships with Uniqlo, NEC and BNP Paribas; and other sponsorship revenues including Tennis-Point, ICP and OFX. ITF circuit sanc on fees and player IPIN revenues (listed as 'Receipts from events' in note 7) increased from $2.2m in 2020 to $3.7m in 2021 reflec ng the post-pandemic return of tour events but was suppressed by the six-month extension of annual IPIN memberships granted in 2020. The ITF World Tennis Tour bounced back in 2021 with almost 8,000 men and women compe ng in 34,038 main draw matches across 759 tournaments in 54 countries. Hopman Cup revenue remained stable at $0.3m (2020: $0.2m) represen ng the final receipt of termina on fees of the event licence. The ITF strongly believes in the importance of a combined men's and women's interna onal team event in the tennis calendar, con nues to sanc on the Hopman Cup, and is working on hos ng the event in 2023. Data rights income increased to $11.4m (2020: $6.3m) in line with contractual revenues arising from an increase in the number of matches on the ITF World Tennis Tour. The postponed Tokyo 2020 Olympic and Paralympic Games took place successfully in 2021 and receipts of $21.7m were received from the IOC in the year. A further receipt, es mated at $2.7m, is expected in March 2022. Income rela ng to the organisa on of the Olympic Tennis Event Report of the Chairman of the Finance Committee

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