2022 ITF Annual Report and Financial Statements

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ITF Trust Annual Report and Financial Statements 2022 4 Technical and sundry income has remained flat at $1.6m (2021: $1.6m). Opera ng Expenditure Opera ng expenditure for 2022 was $92.7m (2021: $74.8m), a 23.9% increase, reflec ng a full programme of flagship compe ons in the year. Billie Jean King Cup and Davis Cup player prize money and na ons' par cipa on payments totalled $33.3m, a $9.5m or 39.9% increase on 2021 which, along with record levels of Data Sales payments of $10.8m in 2022 (2021: $5.2m), contributed to a $14.4m increase in Professional Tennis costs to $59.9m (2021: $45.5m). From 2022 onwards, the ITF are commi ed to making advance data sales payments at a fixed level providing 50% of prize money for all tournaments with a prize fund of $25,000 and above. In addi on to this, the Board approved strategic funding for Balanced Calendar Fund grants to encourage more countries to hold tournaments and upgrade exis ng tournaments to higher prize money levels – see the Strategic Projects sec on for details. Tennis Development opera ng expenditure increased by $3.2m to $10.5m in 2022 (2021: $7.3m) as development ac vi es and programmes previously impacted by Covid-19 returned, demonstra ng the ITF's commitment to deliver all programmes to the fullest extent possible. Commercial costs increased by $1.7m in 2022 to $4.0m (2021: $2.3m) due to agency fees and commissions on significant new sponsorship deals signed during the year. Presiden al and Communica ons department expenditure increased from $5.2m in 2021 to $5.7m in 2022 as some ITF Board mee ngs were able to be held in person rather than virtually, and the Annual General Mee ng was also conducted in person in Glasgow, Great Britain. Tight cost control limited the increase in costs to only 9.6% compared with the previous year. With the Tennis An -Doping Programme being passed over to the Interna onal Tennis Integrity Agency (ITIA), An -doping expenditure decreased $4.0m and Integrity, Science and Technical expenditure overall fell by $3.2m to $3.9m in 2022 (2021: $7.2m). The offse ng $0.8m of expenditure arose from increases in legal fees and legal staff costs. Finance and Administra on opera ng costs increased $1.6m from $5.2m in 2021 to $6.8m in 2022. $1.0m of this increase is driven by increased IT expenditure, with development work on website and IPIN systems giving way to ongoing support and maintenance needs. The IT department are working on two new digital transforma on projects; the modernisa on of the Baseline tournament database and the crea on of a customer data pla orm, with associated capitalised development expenditure replacing that of the previous IPIN and website projects. Staff costs, included within each department, amounted to $14.8m in total (2021: $11.6m), a $3.2m increase, of which $0.9m was caused by adverse movement in the foreign exchange rate as salaries are paid in Sterling. The remainder was the result of salary increases necessitated by surging infla on and the average staff headcount increasing by eight people. Taxa on shows a charge of less than $0.1m (2021: rebate $0.4m) comprising a prior year tax adjustment on the R&D tax credits claimed against qualifying expenditure on the ITF World Tennis Number project in 2021. Accordingly this has been designated against Strategic Projects. Strategic Projects Strategic projects are directly related to delivering the objec ves of the ITF2024 strategy and not considered as ongoing or normal ac vi es. Strategic project expenditure in 2022 consisted of $0.3m of amor sa on on projects capitalised in previous years (2021: $0.7m), $1.4m of new expenditure for the ITF World Tennis Number project (2021: $1.0m) and $1.2m of spending on the Balanced Calendar Fund (2021: $0.8m but not classified as a strategic project in that year). The ITF World Tennis Number is a key project which gives our member Na onal Associa ons the means to iden fy players and grow par cipa on levels, while also providing meaningful ra ngs to recrea onal and professional players alike. R&D tax credits for costs incurred in 2022 have been claimed, but as the company is in a profit making posi on for 2022 this has not resulted in a rebate, but a decrease in the u lisa on of brought forward tax losses. The less than $0.1m tax charge relates to a small adjustment to the tax rebate claimed in 2021 (2021: tax rebate $0.4m). The Balanced Calendar Fund was approved by the Board in 2021 to provide grants and other incen ves to increase the quan ty, loca ons and prize money of tournaments around the world. In 2022, $1.2m was spent and this was instrumental in raising the number of ITF World Tennis Tour tournaments to more than 1,000, as well as closing the gap in the amount of playing opportuni es available for women compared to men in line with the aims of the Advantage All ini a ve. Inves ng Ac vi es Inves ng income recorded in the Consolidated Income Statement shows gross investment losses of $4.7m (2021: $4.2m gains) and a net loss of $5.0m a er costs, giving a simple nega ve return of 9.4% (2021: net gain $4.0m, Report of the Chairman of the Finance Committee (continued)

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