ANNUAL FINANCIAL REPORT · reflected audience research conducted in 2001 whereby programs and the ensuing marketing campaign were tailored to specific audience demographics. Commercial

ANNUAL FINANCIAL REPORT

31 December 2003

Sydney Symphony OrchestraHoldings Pty Limited

A.B.N. 70 072 864 067

Sydney Symphony Orchestra Holdings Pty LimitedA.B.N. 70 072 864 067

Contents Page

Directors’ Report 1

Statement of Financial Performance 3

Statement of Financial Position 4

Statement of Cash Flows 5

Notes to the Financial Statements 6

Directors’ Declaration 18

Independent Audit Report 19


Directors’ Report for the year ended 31 December 2003

1

The directors present their report together with the financial report of Sydney SymphonyOrchestra Holdings Pty Limited for the year ended 31 December 2003 and the auditor’s reportthereon.

DIRECTORSThe directors, at any time during or since the financial period, are:

Helen Lynch AM (Chairman)David Maloney (Deputy Chairman)Libby Christie (Managing Director) Appointed 28 July 2003John Conde AOSandro Constantino Appointed 4 June 2003John CurtisGregory Daniel AMAmber DavisRichard Gill OAMStephen Johns Appointed 15 October 2003Renata Kaldor AOGary LinnaneMargaret Moore Resigned 28 May 2003David Smithers AMGabrielle Trainor Appointed 28 January 2004Michael UllmerMary Vallentine AO Resigned 28 May 2003

PRINCIPAL ACTIVITIESThe principal activity of the Company during the period was the performance of symphonicmusic. There were no significant changes in the nature of the activities of the Company duringthe period.

REVIEW AND RESULTS OF OPERATIONS Sydney Symphony Orchestra Holdings Pty Limited presented 182 performances during thetwelve months ended 31 December 2003. The majority of the concerts were held in Sydney atthe Sydney Opera House, Eugene Goossens Hall, City Recital Hall Angel Place and theSydney Town Hall. The net profit for the year to 31 December 2003 amounted to $593,206 (net profit for the yearended 31 December 2002:$19,182). Considerable growth was achieved in concert revenuesin 2003 with a corresponding increase in performance costs, relating to the quality of artistsacross the season and in more innovative presentation styles. The season program for 2003reflected audience research conducted in 2001 whereby programs and the ensuing marketingcampaign were tailored to specific audience demographics. Commercial work expanded in 2003 with the Sydney Symphony notably performing at theOpening Ceremony of the Rugby World Cup and in a number of co-productions with theOpera House. Sponsorship revenue also increased in the year with Emirates secured as the PrincipalPartner of the Sydney Symphony. STATE OF AFFAIRSIn the opinion of the directors, there were no significant changes in the underlying state ofaffairs of the Company that occurred during the financial period under review.

LIKELY DEVELOPMENTSThe Company has scheduled performances of symphonic and other orchestral music, which itwill continue to present during the next financial year. The Company’s continuing viability isdependent on maintaining its current level of government funding.

DIVIDENDS


Statement of Financial Performance for the year ended 31 December 2003

The statement of financial performance should be read in conjunction with the notes to thefinancial statements set out on pages 6 to 17

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Note 31/12/03 31/12/02

$ $ REVENUES FROM ORDINARY ACTIVITIES Funding revenue 2 11,321,632 11,094,488 Ticket sales 3 9,572,114 8,210,778 Sponsorship and donation revenue 2,276,627 1,949,072 Other revenue 4 1,675,766 1,422,243

TOTAL REVENUES FROM ORDINARY ACTIVITIES 24,846,139 22,676,581

EXPENSES FROM ORDINARY ACTIVITIES Employee expenses 13,369,788 13,100,069 Artists fees and expenses 3,888,277 3,423,080 Marketing expenses 2,587,569 2,523,996 Production expenses 1,903,803 1,719,958 Other expenses from ordinary activities 2,045,748 1,709,305 Depreciation expense 8 457,748 180,991

TOTAL EXPENSES FROM ORDINARY ACTIVITIES 24,252,933 22,657,399

NET PROFIT 5 593,206 19,182


Statement of Financial Position as at 31 December 2003

The statement of financial position should be read in conjunction with the notes to the financialstatements set out on pages 6 to 17

4

Note 31/12/03 31/12/02

$ $

CURRENT ASSETS

Cash assets 13a 13,997,974 11,350,155

Receivables 6 345,240 404,816

Other assets 7 266,364 509,424

TOTAL CURRENT ASSETS 14,609,578 12,264,395

NON-CURRENT ASSETS

Receivables 6 9,135 36,821

Property, plant and equipment 8 549,919 1,117,865

TOTAL NON-CURRENT ASSETS 559,054 1,154,686

TOTAL ASSETS 15,168,632 13,419,081

CURRENT LIABILITIES

Payables 9 1,879,819 1,575,851

Prepaid revenue 10 7,065,272 6,120,230

Provisions 11 476,347 690,726

TOTAL CURRENT LIABILITIES 9,421,438 8,386,807

NON-CURRENT LIABILITIES

Provisions 11 1,689,931 1,568,217

TOTAL NON-CURRENT LIABILITIES 1,689,931 1,568,217

TOTAL LIABILITIES 11,111,369 9,955,024

NET ASSETS 4,057,263 3,464,057

EQUITY

Contributed equity 12 250,002 250,002

International touring reserve 22b 1,500,000 1,042,000

Retained profits 22a 2,307,261 2,172,055

TOTAL EQUITY 4,057,263 3,464,057


Statement of Cash Flows for the year ended 31 December 2003

The statement of cash flows should be read in conjunction with the notes to the financial statementsset out on pages 6 to 17

5

Note 31/12/03 31/12/02

$ $

CASH PROVIDED BY OPERATING ACTIVITIES

Cash receipts in the course of operations 13,344,713 11,562,845 Cash payments in the course of operations (24,646,009) (23,658,441)

Grants received from government funding bodies 10 13,500,838 12,241,413

Interest received 517,023 458,278

NET CASH PROVIDED BY OPERATING ACTIVITIES 13b 2,716,565 604,095

CASH FLOWS USED IN INVESTING ACTIVITIES

Proceeds on disposal of property, plant and equipment - 50,000

Payment for property, plant and equipment (68,746) (128,560)

NET CASH FLOWS USED IN INVESTING ACTIVITIES (68,746) (78,560)

NET INCREASE IN CASH HELD 2,647,819 525,535

Cash at the beginning of the financial year 11,350,155 10,824,620

CASH AT THE END OF THE FINANCIAL YEAR 13a 13,997,974 11,350,155


Notes to and forming part of the financial statements for the year ended 31 December 2003

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1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES a) Basis of preparationThe financial report is a general-purpose financial report, which has been prepared in accordance withthe requirements of the Corporations Act 2001 including applicable Accounting Standards, UrgentIssues Group Consensus Views, other authoritative pronouncements of the Australian AccountingStandards Board. It has been prepared on the basis of historical costs and, except where stated, does not take intoaccount changing money values nor current valuations of non-current assets. These accountingpolicies have been consistently applied by the Company and are consistent with those of the previousperiod. Where necessary, comparative information has been reclassified for consistency with current yeardisclosures. b) Revenue recognition Concert revenue Concert revenue is recognised at the time of concert performance. Funding revenue Funding revenue is received from the Australia Council for the Arts (as represented by the MajorPerforming Arts Board) and the New South Wales Ministry for the Arts. Funding is received based onpayment schedules contained in a funding agreement between the funding bodies and SydneySymphony Orchestra Holdings Pty Ltd and is recognised in the calendar year for which it is intendedunder the terms of the funding agreement. Special purpose funding, which requires the Company to fulfil an obligation outside its normaloperations, is recognised at the time the obligation is fulfilled. c) Taxation and Goods and Services Tax The Company is exempt from income tax, capital gains tax and payroll tax by virtue of being a culturalorganisation established for the encouragement of music and a charitable institution. Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST),except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). Inthese circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part ofan item of the expense. Receivables and payables are stated with the amount of GST included. Thenet amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability inthe statement of financial position. Cash flows are included in the statement of cash flows on a grossbasis. The GST components of cash flows arising from investing and financing activities which arerecoverable from, or payable to, the ATO are classified as operating cash flows. d) Non-current assets The carrying amounts of all non-current assets have been reviewed to determine whether they are inexcess of their recoverable amount at balance date. If the carrying amount of a non-current assetexceeds the recoverable amount, the asset is written down to the lower amount.

e) Cash and short-term deposits Cash and short-term deposits are carried at face value of the amounts deposited or drawn. Thecarrying amounts of cash and short-term deposits approximate net fair value. Interest revenue isaccrued at the market or contracted rates and is receivable on maturity of the short-term deposits. 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) f) Receivables Trade debtors are carried at amounts due. The collectibility of debts is assessed at balance date andspecific provision is made for any doubtful accounts. g) Property, plant and equipmentAll items of property, plant and equipment are carried at the lower of cost less accumulateddepreciation, and recoverable amount. Purchases of property, plant and equipment are initially



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recognised and depreciated as outlined below. Depreciation Items of plant and equipment, leasehold improvements, computer equipment and musical instrumentsare depreciated using the straight-line method over their estimated useful lives. Each class of asset in the current year was depreciated over the following useful lives

Asset class Useful Life Computer equipment 3 years Furniture and fittings 8 years Plant and equipment 8 years Musical instruments Between 5 and 15 years

Leased plant and equipment Leases of plant and equipment are classified as operating leases as the lessors retain substantially allof the risks and benefits of ownership. Minimum lease payments are charged against profits over theaccounting periods covered by the lease terms except where an alternative basis would be morerepresentative of the pattern of benefits to be derived from the leased property. h) Accounts payable Liabilities are recognised for amounts to be paid in the future for goods or services received, whetheror not billed to the Company. Trade accounts payable are normally settled within 30 days. i) Prepaid revenue Prepaid revenue is recognised for concert revenue received in advance of a performance and fundingrevenue received in advance of the calendar year for which it is intended. j) Employee benefits Wages, salaries and annual leave The provisions for employee benefits to wages, salaries and annual leave represent the amount whichthe Company has a present obligation to pay resulting from employees’ services provided up to thebalance date. The provisions have been calculated at undiscounted amounts based on wage andsalary rates which are expected to be paid when the liability is settled and include related on-costs. Employee loans Some employees are lent monies which are used in turn to purchase musical instruments. These loansare secured by the instruments themselves. Amounts outstanding are recouped over time throughcontributions withheld from musicians’ salaries.



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1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) j) Employee benefits (continued) Long service leave The liability for employee benefits to long service leave represents the present value of the estimatedfuture cash outflows to be made by the employer resulting from employees’ services provided up to thebalance date. Liabilities for employee benefits which are not expected to be settled within twelve months arediscounted using the rates attaching to national government securities at balance date which mostclosely match the terms of maturity of the related liabilities. In determining the liability for employee benefits, consideration is given to future increases in wage andsalary rates, and the Company’s experience with staff departures. Related on-costs have also beenincluded in the liability. Superannuation plans The Company contributes to several defined-benefit and defined-contribution superannuation plans.Employer contributions in relation to the year ended 31 December 2003 have been expensed againstincome. No liability is shown for superannuation in the statement of financial position as the employercontributions fully extinguish the accruing liability which is assumed by the Commonwealth.



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2. FUNDING REVENUE

31/12/03 31/12/02$ $

Australia Council for the Arts 8,610,531 8,432,756NSW Ministry for the Arts 2,711,101 2,661,732

11,321,632 11,094,488

A significant portion of the Company’s annual revenue consists of funding from federal and stategovernments, through the Australia Council for the Arts and the NSW Ministry for the Arts. As a result,the Company has an economic dependency on these entities. An interim funding agreement wasexecuted in December 2003 covering the period 2004 to 2006, following the expiration of the previousagreement in December 2003. The level of funding and terms of the new agreement are similar to theprevious agreement.

3. TICKET SALES

31/12/03 31/12/02$ $

Subscription package sales 4,603,121 4,470,900Single ticket sales 4,968,993 3,739,878

9,572,114 8,210,778

4. OTHER REVENUE

31/12/03 31/12/02$ $

Orchestral hire income 1,056,764 647,531Interest income 517,023 458,277Other income 101,979 316,435

1,675,766 1,422,243

5. NET PROFIT FROM ORDINARY ACTIVITIES

The net profit from ordinary activities has been arrived at after charging the following items:

31/12/03 31/12/02$ $

Depreciation:Plant and equipment 34,104 11,994Furniture and fittings 114,637 32,732Musical instruments 163,043 56,072Computers 145,964 80,193

Operating lease rental expense 298,828 265,756Provision for employee benefits (92,665) (85,731)Net loss / (gain) on disposal of property, plant and equipment 178,944 (10,348)

There were no bad debts in the year.



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6. RECEIVABLES

31/12/03 31/12/02$ $

CurrentTrade debtors 107,505 262,392Controlling entity - 41,288Related entity 9,178 236Loans 228,557 100,900

345,240 404,816

Non-currentControlling entity 9,135 36,821

7. OTHER ASSETS

31/12/03 31/12/02$ $

Prepayments 140,228 357,429Accrued income 126,136 151,995

266,364 509,424

8. PROPERTY, PLANT AND EQUIPMENT

Plant andequipment

Furnitureand fittings

Musicalinstruments

ComputerEquipment

Total

CostOpening balance 128,406 437,632 890,865 483,588 1,940,491Additions 3,162 - 36,673 28,911 68,746

Disposals (34,796) (251,243) (56,151) (201,875) (544,065)Reclassifications 29,339 71,962 (111,144) 9,843 -Closing balance 126,111 258,351 760,243 320,467 1,465,172

Accumulated depreciationOpening balance (73,560) (208,561) (245,353) (295,152) (822,626)Depreciation expense (34,104) (114,637) (163,043) (145,964) (457,748)Disposals 21,986 133,261 15,652 194,222 365,121Reclassifications (4,134) (16,256) 23,431 (3,041) -Closing balance (89,812) (206,193) (369,313) (249,935) (915,253)

Net book value,31 December 2003 36,299 52,158 390,930 70,532 549,919

Net book value,31 December 2002 54,846 229,071 645,512 188,436 1,117,865

A review of Property, Plant and Equipment during the year resulted in disposals of $179,000 and anincreased depreciation charge in the year of $262,000.

9. PAYABLES

31/12/03 31/12/02

$ $



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Accruals 1,040,819 1,007,204Trade creditors 799,659 513,789Controlling entity 800 53,858Related party 38,541 1,000

1,879,819 1,575,851

10. PREPAID REVENUE

31/12/03 31/12/02

$ $

Prepaid funding revenue 3,856,088 2,922,413Prepaid ticket sales 3,119,561 2,867,160Prepaid other 89,623 330,657

7,065,272 6,120,230

Under the new funding agreement referred to in Note 2 the level of base funding has been maintainedhowever the timing of payments has changed with more funding being paid in advance of the calendaryear for which it is intended.

11. PROVISIONS

31/12/03 31/12/02

$ $

Current employee benefits (Note 14) 476,347 690,726

Non-current employee benefits (Note 14) 1,689,931 1,568,217

12. CONTRIBUTED EQUITY

31/12/03 31/12/02$ $

Ordinary fully-paid shares 250,002 250,002

Holders of ordinary shares are entitled to one vote per share at shareholders’ meetings.



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13. STATEMENT OF CASH FLOWS

a) Reconciliation of cash

For the purposes of the statement of cash flows, cash includes cash on hand and at bank and short-term deposits at call. Cash assets as at the end of the financial period as shown in the statement ofcash flows are as follows:

31/12/03 31/12/02$ $

Cash 2,477,974 1,811,770Short-term deposits 11,520,000 9,538,385

13,997,974 11,350,155

b) Reconciliation of net profit from ordinary activities to net cash provided by operatingactivities

31/12/03 31/12/02$ $

Profit from ordinary activities 593,206 19,182Loss / (gain) on disposal of non-current assets 178,944 (10,348)Add non-cash depreciation 457,748 180,991Net cash provided by operating activities before change in

assets and liabilities 1,229,898

189,825

Change in assets and liabilities: Decrease in receivables 87,262 77,436Decrease in other assets 243,060 696,741Increase / (decrease) in accounts payable 303,967 (101,931)Increase / (decrease) in prepaid revenue 945,042 (12,982)Decrease in provisions (92,664) (244,994)Net cash provided by operating activities 2,716,565 604,095

14. EMPLOYEE BENEFITS

31/12/03 31/12/02$ $

Current 476,347 690,726Non-current 1,689,931 1,568,217

2,166,278 2,258,943

At year end, the Company employed 125 full-time equivalent employees (at year end31 December 2002: 132 employees).



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15. DIRECTORS’ REMUNERATION

The number of directors of the Company whose income from the Company or any related party fallswithin the following bands:

31/12/03 31/12/02

$ Nil 10 8$20,000 - $29,999 1 1$40,000 - $49,999 1 -$70,000 - $79,999 3 2$80,000 - $89,999 1 2$180,000 - $189,999 - 1

Total income paid or payable, or otherwise made available, to all directors of the Company from theCompany or any related party, amounted to $388,128 for the year (year ended 31 December 2002:$404,268).

Payments made to directors are not for their services as directors of the Company. Payments weremade by the Company to directors for their contributions as employees and as a guest conductor ofthe Company.

16. RELATED PARTIES

a) Directors

The names of each person holding the position of director of Sydney Symphony Orchestra HoldingsPty Ltd during the financial year are listed on page 1 in the Directors’ Report. Unless otherwise statedin the Directors’ Report, the directors have been in office for the financial year. Details of directors’remuneration are set out in note 15.

No director has entered into a material contract with the Company since the end of the previousfinancial year and there were no material contracts involving directors’ interests subsisting at year end.

b) Wholly-owned group

The Company is a wholly-owned subsidiary of the controlling entity, the Australian BroadcastingCorporation.

31/12/03 31/12/02$ $

Amounts payable to entities in the wholly-owned group:

Australian Broadcasting Corporation 800 53,858Symphony Australia Holdings Pty Ltd 38,541 956

39,341 54,814



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16. RELATED PARTIES (continued)

These amounts relate to the provision of services. The Australian Broadcasting Corporation andSymphony Australia Holdings Pty Ltd provide services to the Company on a cost basis.

31/12/03 31/12/02$ $

Amounts receivable from entities in the wholly-owned group:

Australian Broadcasting Corporation - 41,288Symphony Australia Holdings Pty Ltd 9,178 236

9,178 41,524

c) Other related parties

Sponsorship from director-related entities is on terms and conditions no more favourable than thoseoffered to other sponsors.

17. AUDITOR’S REMUNERATION

31/12/03 31/12/02$ $

Auditing the financial report 13,500 11,000

13,500 11,000

No other benefits were received by the auditor.

18. EXPENDITURE COMMITMENTS

31/12/03 31/12/02$ $

Operating leases (non-cancellable) Not later than one year 297,317 265,756Later than one year and not later than five years 398,084 531,511

695,401 797,267

Artists fees contracted for but not provided for and payable Not later than one year 1,629,511 2,798,052Later than one year and not later than five years 1,655,600 2,452,000

3,285,111 5,250,052

The Company has operating leases for office accommodation and photocopier rental.

19. SEGMENT INFORMATION

For the current and previous financial period, the Company has performed symphonic music withinAustralia.



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20. GOING CONCERN

The financial statements have been prepared on a going concern basis as the Commonwealth ofAustralia, through the Australia Council for the Arts, and the NSW Ministry for the Arts have agreed toprovide continued funding until 2006. Continued operation is dependent on maintaining current levelsof government funding.

21. ADDITIONAL FINANCIAL INSTRUMENT DISCLOSURE

a) Interest rate risk exposures

The Company’s exposure to interest rate risk and the effective weighted average interest rate forclasses of financial assets and liabilities are set out below:

31 December 2003 Weightedaverage

interest rateFloating interest

rate

Fixed interestmaturing in one

year or lessNon-interest

bearing TotalFinancial assetsCash 3.96% 2,477,974 — — 2,477,974Receivables — — — 354,375 354,375Investments 5.30% — 11,520,000 — 11,520,000

2,477,974 11,520,000 354,375 14,352,349

Financial liabilitiesAccounts payable — — — 1,879,819 1,879,819Employee benefits — — — 2,166,278 2,166,278

— — 4,046,097 4,046,097

31 December 2002

Financial assetsCash 4.57% 1,811,770 — — 1,811,770Receivables — — — 441,637 441,637Investments 4.83% — 9,538,385 — 9,538,385

1,811,770 9,538,385 441,637 11,791,792

Financial liabilitiesAccounts payable — — — 1,575,852 1,575,852Employee benefits — — — 2,258,943 2,258,943

— — 3,994,058 3,994,058

b) Net fair value

The net fair value of financial assets and liabilities at the balance date are those disclosed in thestatement of financial position and related notes. This is because either the carrying amountsapproximate net fair value or because of their short term to maturity.

c) Credit risk exposure

The Company’s maximum exposure to credit risk at balance date in relation to each class ofrecognised financial assets is the carrying amount of those assets as indicated in the statement offinancial position and related notes.



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22. RESERVES

The Australia Council for the Arts advocates that all members of the Major Performing Arts Fund havea strategy to build a reserves base of 20% of total costs. The Company has such a strategy inoperation.

a) Retained profits

31/12/03 31/12/02$ $

Retained profits at the beginning of the year 2,172,055 2,152,873Net profit from ordinary activities for the year 593,206 19,182Transfer to international touring reserve (458,000) -Retained profits at the end of the year 2,307,261 2,172,055

Ordinary shareholders are not entitled to receive dividends or any distribution of property in the eventof the winding up or dissolution of the company. In accordance with the company’s constitution, anyproceeds of liquidation must be transferred to institutions having purposes similar to the purposes forwhich the company was incorporated.

b) International touring reserve

These funds have been set aside to fund regular international touring of the Orchestra.

31/12/03 31/12/02$ $

Opening balance 1,042,000 1,042,000Transfer from retained profits 458,000 -Accumulated funds at the end of the year 1,500,000 1,042,000

c) Other funds

The Company’s Retained profits of $2,307,261 for the year (year ended 31 December 2002:$2,172,055) includes funds transferred from the Symphony Friends and the Stuart ChallenderConductors’ Trust. It is the Board’s intention that the funds be maintained for the long-term future of theCompany and used for specific purposes as outlined below.

(i) Stuart Challender ReserveThese funds have been set aside for the training of Australian conductors and to bring the finestinternational conductors to perform with the Sydney Symphony Orchestra.

31/12/03 31/12/02$ $

Opening balance 214,529 130,977Income for the year 29,301 128,727Expenses for the year (1,818) (30,438)Contribution to conductor costs (10,000) (14,737)Accumulated funds at the end of the year 232,012 214,529



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22. RESERVES (continued)

(ii) Symphony Friends’ ReserveThese funds have been set aside to assist the advancement of the Orchestra, principally through theprovision of scholarships.

31/12/03 31/12/02$ $

Opening balance 278,474 243,985Income for the year 12,004 53,317Expenses for the year (202) (8,828)Scholarships (10,000) (10,000)Accumulated funds at the end of the year 280,276 278,474

23. Contingent Asset Under the terms of the previous grant agreement between DoCITA and Symphony Australia HoldingsPty Ltd (Symphony Australia) there remains $218,446 owing to the Company outstanding fromSymphony Australia (balance outstanding at 31 December 2002: $318,446). This item will be recordedas revenue when it is received. 24. ADDITIONAL DISCLOSURES Sydney Symphony Orchestra Holdings Pty Ltd. is a company limited by shares, incorporated inAustralia and having its principal place of business and registered office at: Level 5 52 William Street East Sydney NSW 2011

Documents

ANNUAL FINANCIAL REPORT · reflected audience research conducted in 2001 whereby programs and the ensuing marketing campaign were tailored to specific audience demographics. Commercial