ITF

47 DIRECTOR'S REPORT DIRECTOR'S REPORT The directors present their directors' report and financial statements for the year ended 31 December 2013. Principal activities The principal activities of the Group are the development and administration of the game of tennis worldwide. The surplus for the year after tax was $3.34m (2012: $3.32m). Please refer to the report of the Chairman of the Finance Committee on page 42 for a more detailed financial review of the year. Enhanced business review Key measures of performance for the Group are Operating Income, which was $57.8m in 2013 (2012: $52.7m) and Operating Deficit, which was $0.1m in 2013 (2012: Surplus $0.7m). The ITF is exposed to a variety of risk factors which are assessed on a regular basis. These include the loss of a key sponsor, exposure to medium term fluctuations in foreign exchange rates and the possible impact of heightened security concerns in certain countries where we operate events. Policy and practice on payment of creditors The ITF continues to operate a 30 day payment policy in respect of trade creditors. At the year end there were 5 days (2012: 13 days) purchases in trade payables. Directors The directors who held office during the year were as follows: Throughout the year: Francesco Ricci Bitti Juan Margets Jean Gachassin Jack Graham Roman Murashkovsky Jon Vegosen Stuart Smith Rene Stammbach Georg Von Waldenfels Retired July 2013: Ismail El Shafei Lucy Garvin Chris Kypriotis Suwat Liptapanlop Geoff Pollard Elected July 2013: David Haggerty Stephen Healy Tarak Cherif Sergio Elias Anil Khanna Employees The Group is committed to employment practices, policies and procedures which follow best practice, based on equal opportunities for all employees irrespective of gender, race, national origin, religion, colour, disability, sexual orientation, age or marital status. Employees are kept closely involved in major changes affecting them through such measures as team meetings, briefings and internal communications. There are well established procedures to ensure that the views of employees are taken into account in reaching decisions. Political and charitable contributions The Trust made a charitable contribution of $10,000 to Motor Neurone Disease Association in the year. Neither the Trust nor any of its subsidiaries made any other political or charitable donations or incurred any political expenditure during the year. Disclosure of information to auditors The directors who held office at the date of approval of this directors' report confirm that, so far as they are each aware, there is no relevant audit information of which the Group's auditors are unaware; and each director has taken all the steps that he ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Group's auditors are aware of that information. Responsibility statement The directors who held office at the date of approval of this directors' report confirm that, so far as they are each aware, the financial statements have been prepared in accordance with the applicable set of accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Trust. Furthermore, they confirm that the directors' report includes a fair review of the development and performance of the business and the principal risks and uncertainties that it faces. By order of the Board Francesco Ricci Bitti Rene Stammbach President Chairman of the Finance Committee Bank Lane Roehampton London SW15 5XZ 06 March 2014 STRATEGIC REPORT 46 STRATEGIC REPORT The ITF's Strategic report is prepared in accordance with The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 for a company preparing group accounts (and not entitled to prepare accounts under the small companies' regime): Business review: A fair review of the group's business is outlined in the Report of the Chairman of the Finance Committee above. Principal risks and uncertainties: The ITF prepares and reviews its Risk Register on an annual basis. The major risks identified in the Risk Register for 2013 include: • Sponsorship packages remain unsold • Security issues at ITF tournaments • Players or spectators injured at an ITF event • Quality of player field is diminished at ITF tournaments • Information, Communication and Technology risks – software failure, data loss, virus/attack Development and performance during the financial year The major addition to the activities of the ITF in 2013 was the introduction of Data Sales. This represents a new income stream that was launched successfully and generated $3.0m in the seven months since launch, as detailed above. The net income from this activity is shared with the member nations. Position at the end of the year The ITF has recognised some challenges in generating commercial revenues and is focussing efforts on increasing revenues through new sponsorship deals, TV licensing deals and Data Sales. Current forecasts indicate that 2014 and 2015 will both return a deficit, so at the AGM in July 2013 the Board of Directors agreed that a review of the Commercial department and an assessment of its sales model will take place, with particular emphasis of the sale of Television broadcasting rights. Since the AGM, a report has been commissioned into the value of the ITF commercial properties, steps have been undertaken to increase global reach, and a new Commercial Director has been appointed. Having evaluated all of its options, the Board of Directors also agreed to a limited utilisation of reserves, if required, over the next two years to see the ITF through this period without reducing programmes. The Board has agreed the utilisation of up to $6m from reserves by the end of 2015, noting that the required figure may be significantly lower if either investment returns are generated as expected, or income increases above forecast. The ITF remain positive that, as in previous years, the strong balance sheet it holds, and closely managed expenditure, will help meet the challenges ahead. Key performance indicators: • Commercial – Sponsorship income: Actual $20.1m • Commercial – Broadcast Iincome: Actual $7.1m • Corporate services – Operating surplus: Actual $0.5m (excluding Centenary costs) • Corporate services – Investment portfolio return benchmark: 2013 Actual: 9% By order of the Board Francesco Ricci Bitti Rene Stammbach President Chairman of the Finance Committee Bank Lane Roehampton London SW15 5XZ 06 March 2014

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