ITF

ITF FINANCIAL STATEMENTS I 43 Receipts from events reduced by $1.3m to $5.5m in 2015 again representing a return to more normal levels of the event income after the particularly high profi le semifi nals and Final in 2014. Data Sales activity generated performance based revenues of $3.3m over and above the minimum contractual revenues of $2.1m. 80% of the net income is distributed to the member nations to deliver the mission of growing, developing and promoting tennis around the world. Income from the Olympic Games is recognised in the Consolidated Income Statement over the four year period of the Olympiad. Total income received from the IOC relating to the 2012 Olympic Games amounted to $23.6m, an increase of 84% over the 2008 Olympics. This income is recognised over the four years from 2012 to 2015. Further detail is provided in note 30 to the fi nancial statements. Operating expenses As detailed above, total operating expenses decreased by $3.2m to $53.5m. Once the adjustment is made for the change in accounting treatment of the Hopman Cup, reducing costs from $6.6m in 2014 to $0.2m in 2015, like-for-like operating expenses increased by $3.2m from $50.1m to $53.3m. Professional Tennis costs increased by $1.5m due to the increase in the distribution of Data Sales profi ts to National Associations which increased by $1.0m in line with total Data Sales revenues, and the increases in prize money for the Davis Cup and Fed Cup. Tennis Development expenditure increased by $0.6m to $9.2m in 2015. During the year the Grand Slam nations committed an additional $0.4m to the Grand Slam Development Fund which has meant that expenditure in the fund has increased accordingly. Development Assistance grants awarded by the ITF remained at $2,500 per award in 2015 but no disaster relief was required for 2015 (2014: $51,000). The activities of the Development department benefi tted over 150 countries in 2015. Commercial costs saw savings of $0.1m in 2015, with total department expenditure of $2.7m. The Sponsorship team continues seeking new sponsors, and supporting and renewing existing agreements. Presidential & Communications costs increased by $0.8m largely due to handover between the outgoing and incoming presidents. In addition, communications initiatives including investment in social media and websites as well as marketing activities continued in 2015 offset by savings in routine expenditure, travel and Board of Directors' costs. Science & Technical saw an increase in costs of $0.4m in 2015 due to Anti-Doping growing its level of in-and out-of-competition testing and the development of the Athlete Biological Passport. A portion of these costs are recharged to the ATP, WTA and Grand Slam refl ected in increased Anti-Doping income as discussed above. Finance & Administration costs increased by $0.4m in 2015 as a result of the reinstatement of part of the bad debt provision released in the previous year due to the ageing of some larger Television debts. Although these debts are provided for they are still being pursued for payment. Foreign exchange operating losses of $0.02m were recognised in 2015 (2014: $0.4m), with exchange rate fl uctuations throughout the year offsetting each other. Taxation expense was $0.2m (2014: $0.3m) arising from taxation on the profi ts of the Hopman Cup in Australia and withholding tax arising on Television receipts, which offset against any UK tax liability to the fullest extent possible. A UK tax rebate of $0.06m was received in relation to tax previously paid in 2012. The increase in depreciation expense is a result of the continued investment in Information Technology during the current and previous years as discussed below. The Investing section of the Consolidated Income Statement shows a gross investment loss of $0.7m for the year (2014: income $1.2m). The two main investment portfolios decreased in value in 2015 by $1.0m, -2.5% (2014: increased $1.0m, +2.5%) after costs, which was below the -1.5% portfolio benchmark. The performance of the portfolio managers and the investment guidelines are overseen by the ITF's independent investment advisors, Cambridge Associates, who report on performance and make recommendations where appropriate. In 2015, Investing activities overall generated a $1.3m loss (2014: $0.2m profi t) taking into account income and expenditure from the investment portfolio, income generated on the short term investment of Olympic funds held in sterling, and the associated year-end foreign exchange revaluations of a $0.3m loss (2014: $0.9m).

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