ITF

46 STRATEGIC REPORT STRATEGIC REPORT Business review: A 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 2014 include: • Loss of a major sponsor or inability to sell high value sponsorship packages • 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 data sales project, introduced during 2013, has experienced increasing income levels throughout 2014 generating $4.3m in the twelve months (2013: $3.0m in seven months). The net income from this activity is shared with the member nations. Income from Sportradar is recorded as income and the distribution to the nations recorded as an expense. The high profile Davis Cup semifinals and Final generated significant ticket revenues as well as TV rights and sponsorship income. Position at the end of the year In 2013 the Board of Directors of ITF Limited agreed to the utilisation of up to $6m of reserves to cover losses expected in 2014 and 2015. Due to the positive result in 2014 no such utilisation was required for the year and whilst the budget for 2015 indicates an operating loss of $1.5m, the shortfall was limited through the budgeting process to a level where it is possible that it may be covered by investment returns. In recognition of continuing challenges to generating commercial revenues and factors being responsible for the improvement in 2014 not being guaranteed to be repeated, the Board are considering extending the mandate to cover potential losses in 2016. The Board remain resolved to meeting those challenges and efforts are being focused on raising additional revenues through new sponsorship deals, TV licensing deals and data sales, under the management of the new Commercial Executive Director. A new global TV license agreement has been signed with beIN and comes into full effect in 2017 after the expiry of existing deals. Despite the current situation the Board remains confident that the strong balance sheet it holds, closely managed expenditure and income generating opportunities from commercial properties will help meet the challenges ahead. Key performance indicators: • Commercial – Sponsorship Income: Actual $17.9m • Commercial – Broadcast Income: Actual $8.4m • Commercial – Data Rights Income: Actual $4.3m • Corporate Services – Operating Surplus: Actual $2.1m • Corporate Services – Investment Portfolio Return: 2014 Actual 2.5% By order of the Board Francesco Ricci Bitti Rene Stammbach President Chairman of the Finance Committee Bank Lane Roehampton London SW15 5XZ 18 March 2015

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