ITF

57 ITF FINANCIAL STATEMENTS 2013 2012 $000 $000 Sponsorship rights 20,139 21,113 Receipts from events 5,114 4,824 Hopman Cup 8,741 6,624 Television and licensing income 7,123 7,232 41,117 39,793 6. Significant accounting judgements, estimates and assumptions The preparation of the ITF's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in future. a) Judgements In the process of applying the ITF's accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements: i)Trade receivables valuation Provisions have been made for those trade receivables where the recoverability is considered uncertain. ii) Provisions The provision for dilapidations has been calculated using an estimate for the costs that would be payable under the terms of the existing lease. iii) Taxation Some of the ITF's subsidiaries are subject to routine tax audits and also a process whereby tax computations are discussed and agreed with the proper authorities. Whilst the ultimate outcome of such tax audits and discussions cannot be determined with certainty, management estimates the level of provisions required for both current and deferred tax assets on the basis of professional advice on the nature of current discussions with the authority concerned. b) Estimates and assumptions The key sources of estimation uncertainty at the balance sheet date, that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year relate to the valuation of hedging instruments and are discussed in note 5(m). 7. Sponsorship, Competition and Television income 56 Hedges which meet the strict criteria for hedge accounting are accounted for as follows: Fair value hedges The change in the fair value of a hedging derivative is recognised in income and expenditure. The change in the fair value of the hedged item attributable to the risk hedged is recorded as a part of the carrying value of the hedged item and is also recognised in income and expenditure. For fair value hedges relating to items carried at amortised cost, the adjustment to carrying value is amortised through income and expenditure over the remaining term to maturity. Any adjustment to the carrying amount of a hedged financial instrument, for which the effective interest rate method is used, is amortised through income and expenditure. Amortisation may begin as soon as an adjustment exists and shall begin no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged. If the hedge item is derecognised, the unamortised fair value is recognised immediately in income and expenditure. When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in income and expenditure. The changes in the fair value of the hedging instrument are also recognised in income and expenditure. Cash flow hedges The effective portion of the gain or loss on the hedging instrument is recognised directly in the equity, while any ineffective portion is recognised immediately in income and expenditure. Amounts taken to equity are transferred to income and expenditure when the hedged transaction affects income and expenditure, such as when the hedged financial income or financial expense is recognised or when a forecast sale occurs. Where the hedged item is the cost of a non-financial asset or non-financial liability, the amounts taken to equity are transferred to the initial carrying amount of the non-financial asset or liability. If the forecast transaction or firm commitment is no longer expected to occur, amounts previously recognised in equity are transferred to income and expenditure. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognised in equity remain in equity until the forecast transaction or firm commitment occurs. Hedges of a net investment Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is accounted for as part of the net investment, are accounted for in a way similar to cash flow hedges. Gains or losses on the hedging instrument relating to the effective portion of the hedge are recognised directly in equity while any gains or losses relating to the ineffective portion are recognised in income and expenditure. On disposal of the foreign operation, the cumulative value of any such gains or losses recognised directly in equity is transferred to income and expenditure. NOTES (CONT.) (FORMING PART OF THE FINANCIAL STATEMENTS) ITF FINANCIAL STATEMENTS

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