ITF

ITF Trust Annual Report and Financial Statements 2022 5 posi ve 8.1%). The por olio con nues to be overseen by Cambridge Associates under an advisory mandate and is supervised by the ITF's Investment Advisory Panel which reports to the ITF Finance & Audit Commi ee and ITF Board of Directors on a regular basis. The investment por olio is invested for long-term growth but include strategies for mi ga ng short-term vola lity. This diversified approach foregoes an element of gains in rising markets for less exposure to falling markets, reflected by a slight underperformance to benchmark. Consolidated Statement of Financial Posi on Net assets of the ITF Group have decreased from $44.4m at 31 December 2021 to $40.2m at 31 December 2022. Investment in digital transforma on projects and upgraded equipment, approved to be funded from Reserves, amounted to $1.5m in 2022 (2021: $1.4m) split between $1.3m intangible assets (so ware development) and $0.2m tangible assets (computer hardware). Capitalised so ware development includes work performed on the new Baseline system modernisa on and customer data pla orm projects. Total trade and other receivables increased by $13.7m to $29.5m in the year (2021: $15.8m). Trade receivables rose by $6.8m due to a large invoice outstanding at the end of the year. In addi on, contract assets increased by $4.3m with the accrual of Data Sales income at the year-end. Investments of $40.7m (2021: $65.4m) represent the ITF investment por olios and Olympic deposits. The ITF investment por olios total $33.4m, a $20.2m decrease from 2021 being a $15m withdrawal of cash deposits to aid ITF working capital, plus the gross loss of the por olio in the year. Of the por olios, $5.9m is held as cash deposits (2021: $17.3m) either awai ng withdrawal to support working capital or awai ng reinvestment. Olympic deposits total $7.3m, a decrease of $4.5m with the regular drawdown of the investment as planned. The ITF reserves policy provides for holding funds for long-term financial stability and for investment in Strategic Ini a ve projects. The investment guidelines reflect the long- term objec ve and returns should therefore be viewed in this context. Deriva ve financial instruments of a $1.9m liability (2021: $0.2m liability) 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 2022 being taken to reserves in line with hedge accoun ng requirements. Further detail is provided in notes 33 and 36(e) to the financial statements. Cash at bank and in hand has increased by $4.3m in the year to $19.3m (2021: $15.0m) but investment cash deposits have decreased by $19.7m to $6.0m (2021: $25.7m). Net cash from opera ng ac vi es was an ou low of $13.5m represen ng a large increase in receivables and decrease in deferred income. There was a cash ou low from inves ng ac vi es of $1.3m. The investment of cash in the Olympic por olio and liquida on of investments in the main por olio cancel out, leaving the acquisi on of intangible and fixed assets as the main driver of the ou low. A cash ou low from financing ac vi es of $0.7m relates to the lease payments. See the Consolidated Cash Flow Statement for further detail. The ITF held $25.4m in lieu of guarantees from Kosmos Tennis, required by the Davis Cup licensing agreement, as security against default or termina on. This cash was to be held separately and not for use within the business and was therefore held as restricted cash and excluded from the cash flow statement. A er the year-end, the partnership with Kosmos Tennis for the Davis Cup ended and restricted cash has been transferred to cash at bank and in hand. Current trade and other payables increased by $3.5m in the year to $50.0m (2021: $46.5m). The trade payables increase of $3.0m, the accruals decrease of $0.5m and deferred income decrease of $0.7m nets to a $1.8m increase. Adding onto this, there is $1.4m withholding tax payable to HMRC for player prize money for non-UK teams who competed in the 2022 Billie Jean King Cup Finals. In addi on to this, non-current deferred income has decreased by $7.8m to nil (2021: $7.8m) represen ng a further drawdown of Olympic funding for the ITF Development Programme. Conclusion and Outlook Overall, 2022 was a year of recovery. The ITF restored our flagship compe ons to their full annual schedules, the ITF World Tennis Tour surpassed pre-pandemic levels, and income rose to almost $100m (including unusual income of $12.6m as detailed above). Significant work underpins the figures presented here, with all departments contribu ng, whether through obtaining new commercial partners, increasing the number of ITF tournaments or delivering increased investment in tennis though payments to our Na onal Associa ons and the ITF Development Programme. Our strategic projects con nue to deliver vital transforma ve ini a ves from which the ITF, its member na ons, and the global tennis community will benefit as part of our mission to deliver tennis for future genera ons. While the investment por olio losses and the foreign exchange hedge revalua on – two items substan ally out of the control of the ITF Board – have caused an overall reduc on in reserves to $40.2m, the posi ve opera ng result and op mis c outlook for 2023 means that the ITF is in a strong posi on to con nue its recovery and deliver more sound financial results in years to come. This will mean even greater investment in our sport around the world. I would like to take this opportunity to thank the execu ve, the staff and my fellow members of the Finance & Audit Commi ee for their hard work and commitment to the ITF. René Stammbach Chairman of the Finance & Audit Commi ee

• Cover