THE HONG KONG PHILHARMONIC SOCIETY LIMITED REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

Transcription

1 THE HONG KONG PHLHARMONC SOCETY LMTED REPORT AND FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 20

2 3 :tl : :l: :w: :. : = THE HONG KONG PHLHARMONC SOCETY LMTED REPORT AND FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 20 CONTENTS REPORT OF THE BOARD OF GOVERNORS NDEPENDENT AUDTOR'S REPORT oooooooo 3 STATEMENT OF NCOME AND EXPENDTURE o o o o o 0. 0 o. o 5 Pges 1 to 2 to 4 :.! BALANCE SHEET o... o... o.. o.. o.. o... o... o... o... o... o.. o.. o STATEMENT OF CHANGES N FUNDS 7 STATEMENT OF CASH FLOWS... o.. o... o o.. o o... 8 NOTES TO THE FNANCAL STATEMENTS... o to 23 Wl ' ' Jr J, Jr :)

3 THE HONG KONG PHLHARMONC SOCETY LMTED REPORT OF THE BOARD OF GOVERNORS The Governors hve plesure in submitting their nnul report together with the udited finncil sttements of The Hong Kong Philhrmonic Society Limited (the "Society"} for the yer ended 31 Mrch 20. PRNCPAL ACTVTES The principl ctivities of the Society re to mnge nd develop the Hong Kong Philhrmonic Orchestr, to present public concerts nd to promote the pprecition of music in Hong Kong. FNANCAL STATEMENTS The results of the Society for the yer ended 31 Mrch 20 nd the stte of the Society's ffirs s t tht dte re set out in the finncil sttements on pges 5 '"!d 6 respectively. Movements in funds of the Society re set out in the sttement of chnges in funds on pge 7. PROPERTY, PLANT AND EQUPMENT Detils of the movements in property, plnt nd equipment of the Society re set out in note 1 0 to the finncil sttements. GOVERNORS The Governors during the finncil yer nd up to the dte of this report were: Elected by Voting Members Mrs. Jnice Choi Kwn Wing Kum Mr. Dvid Fried Mr. Peter Kilgour Mr. Peter Lo Mr. Dniel Ng Yt-chiu Mr. Stephn Spurr Mr. Liu Yuen Sung Dr. Lilin Leong, BBS, JP Mr. Glenn Fok Mr. Nichols Robert Sllnow-Smith Mr. Jck So Chk Kwong, JP Sir Dvid Tng, KBE Ms. Winnie Chiu Wing Kwn Ms. Jonne Chn Jo Win Mr. Chung Shui-ming, GBS, JP {ppointed on 28 October 2010} (ppointed on 28 October 201 0) (ppointed on 28 October 201 0) (ppointed on 28 October 201 0) (resigned on 28 October 201 0) Appointed by the Secretry for Home Affirs Mrs. Michelle Ong Cheung Mr. Lm Woon Kwong, GBS, JP Prof. Liu Ching Chih Mr. Benedict Sin Ng Vn Mr. Kenny Wong Km Shn Mr. Dvid Zchris Prof. Dniel Chu (resigned on 28 October 201 0} (ppointed on 28 October 201 0) 1

4 = = :w =- :wl =- = ) THE HONG KONG PHLHARMONC SOCETY LMTED REPORT OF THE BOARD OF GOVERNORS (Continued) GOVERNORS (Continued) n ccordnce with Articles 56 nd 57 of the Articles of Assocition of the Society, ll Governors ppointed by Government of the Hong Kong Specil Administrtive Region shll serve for two-yer term nd no Governor my serve in excess of mximum period of six consecutive yers. n 2010, no Governor ws due to retire under the six-yer rule. BOARD OF GOVERNORS' NTERESTS During the yer, under sponsorship greement, the Swire Group Chritble Trust (uthe Swire Trust") contributed dontion mounted to 12,750,000 to the Society. As prt of the greement, the Swire Trust nominted representtive, Mr. Peter Kilgour, to be elected to the Society's Bord of Governors. Mr. Peter Kilgour is director of Swire Pcific Limited, which is the mjor contributor to the Swire Trust. Except s disclosed bove, there were no contrcts of significnt to which the Society ws prty nd in which Society's Bord of Governors member hd mteril interest, whether directly or indirectly, subsisted t the end of the yer or t ny time during the yer. MANAGEMENT CONTRACTS No contrcts concerning the mngement nd dministrtion of the whole or ny substntil prt of the business of the Society were entered into or existed during the yer. AUDTOR Crewe Horwth (HK) CPA Limited retire nd, being eligible, offer themselves for re-ppointment. A resolution for the re-ppointment of Crewe Horwth (HK) CPA Limited s uditors of the Society is to be proposed t the forthcoming nnul generl meeting. On behlf of the Bord of Governors :J t 2

5 :1 l l j J J "' Crowe Horwth. ;t <ll> tt HT:Jrmlll Crowe Horwth (HK) CPA Umlted Member Cfowe Horwlh lnlemllool l@ 1R8i'lil33tl lll134fl 34/F The Lee Grdens, 33 Hysn Avenue, Cusewy By, Hong Kong - NDEPENDENT AUDTOR'S REPORT TO THE MEMBERS OF Min ss THE HONG KONG PHLHARMONC SOCETY LMTED :cwes,!;1k (ncorported in Hong Kong nd limited by gurntee nd not hving shre cpitl) We hve udited the finncil sttements of The Hong Kong Philhrmonic Society limited (the "Society") set out on pges 5 to 23, which comprise the blnce sheet s t 31 Mrch 20, nd the sttement of income nd expenditure, sttement of chnges in funds nd sttement of csh flows for the yer then ended, nd summry of significnt ccounting policies nd other explntory informtion. Bord of Governors' responsibility for the finncil sttements The Bord of Governors is responsible for the preprtion of finncil sttements tht give true nd fir view in ccordnce with Hong Kong Finncil Reporting Stndrds issued by the Hong Kong nstitute of Certified Public Accountnts nd the Hong Kong Compnies Ordinnce nd for such internl control s the Bord of Governors determines is necessry to enble the preprtion of finncil sttements tht re free from mteril missttement, whether due to frud or error. Auditor's responsibility Our responsibility is to express n opinion on these finncil sttements bsed on our udit. This report is mde solely to you, s body, in ccordnce with section 141 of the Hong Kong Compnies Ordinnce nd for no other purpose. We do not ssume responsibility towrds or ccept libility to ny other person for the contents of this report. We conducted our udit in ccordnce with Hong Kong Stndrds on Auditing issued by the Hong Kong nstitute of Certified Public Accountnts. Those stndrds require tht we comply with ethicl requirements nd pln nd perform the udit to obtin resonble ssurnce bout whether the finncil sttements re free from mteril missttement. An udit involves performing procedures to obtin udit evidence bout the mounts nd disclosures in the finncil sttements. The procedures selected depend on the uditor's judgement, including the ssessment of the risks of mteril missttement of the finncil sttements, whether due to frud or error. n mking those risk ssessments, the uditor considers internl control relevnt to the entity's preprtion of finncil sttements tht give true nd fir view in order to design udit procedures tht re pproprite in the circumstnces, but not for the purpose of expressing n opinion on the effectiveness of the entity's internl control. An udit lso includes evluting the ppropriteness of ccounting policies used nd the resonbleness of ccounting estimtes mde by the Bord of Governors, s well s evluting the overll presenttion of the finncil sttements. We believe tht the udit evidence we hve obtined is sufficient nd pproprite to provide bsis for our udit opinion. 3

6 Crowe Horwth... NDEPENDENT AUDTOR'S REPORT TO THE MEMBERS OF THE HONG KONG PHLHARMONC SOCETY LMTED (ncorported in Hong Kong nd limited by gurntee nd not hving shre cpitl) (Continued) Opinion n our opinion, the finncil sttements give true nd fir view of the stte of the Society's ffirs s t 31 Mrch 20 nd of its surplus nd csh flows for the yer then ended in ccordnce with Hong Kong Finncil Reporting Stndrds nd hve been properly prepred in ccordnce with the Hong Kong Compnies Ordinnce. cf!'lfi»vturt)()t} Jtd Crowe Horwth (HK) CPA Limited Certified Public Accountnts Hong Kong, 14 September 20 Lm Cheung Shing :J1 Prctising Certificte Number P :, J :l TCH

7 =ll : = = = = : 31 : 3 31 M THE HONG KONG PHLHARMONC SOCETY LMTED STATEMENT OF NCOME AND EXPENDTURE FOR THE YEAR ENDED 31 MARCH 20 Note ncome Recurrent government subvention 4 - Consolidted grnt - Outbound culturl exchnge 15 Venue prtnership scheme 15 Swire projects 15 Revenue from musicl events Fund rising ctivities nd sponsors' contributions nterest income Advertisements ncome from recordings Miscellneous income Expenditure Concert expenses 5 Mrketing nd udience development expenses 6 Sponsorship nd fund rising ctivities Eduction nd outrech expenses Administrtive nd generl expenses 7 Surplus for the yer The ccompnying notes form prt of these finncil sttements ,800,000 58,800,000 1,700,729 2,163,255 1,780,169 12,750,000 12,500,000 19,530,125 16,663,070 16,316,988 14,428, ,209,915 1,058,885 6,489 6, ,031 1,389,032 2,895, ,626,088 83,798,730 74,920,812 7,437,750 7,375,272 3,026,475 1,973, , ,824 15,399,679 15,478,128 (0,629,016) (100,466,214) 2,266,536 6,159,874

8 : = = THE HONG KONG PHLHARMONC SOCETY LMTED BALANCE SHEET AS AT 31 MARCH 20 = : Note = ASSETS Non-current ssets Property, plnt nd equipment 10 1,988,541 2,426,423 :J :ll = Current ssets Accounts nd other receivbles Amount due from the Hong Kong Philhrmonic Endowment Trust 16 Csh nd csh equivlents 12 9,120, ,760 12,487,332 21,789,169 10,631,950 8,624,878 19,256,828 Totl ssets 23,777,710 21,683,251!! FUNDS Accumulted surplus Young udience fund 13 Totl funds LABLTES Current libilities Accruls nd other pybles 14 Deferred income 15 Amount due to the Hong Kong Philhrmonic Endowment Trust 16 Totl libilities Totl funds nd libilities 14,781,245 95,501 14,876,746 7,301,693 1,599,271 8,900,964 23,777,710 Approved nd uthorised for issue by the Bord of Governors on 14 September 20 On behlf of the bord nying notes form prt of these finncil sttements. 6 Governor 12,5 19,463 90,747 12,610,210 6,067,376 2,187, ,240 9,073,041 21,683,251

9 :WJ THE HONG KONG PHLHARMONC SOCETY LMTED STATEMENT OF CHANGES N FUNDS FOR THE YEAR ENDED 31 MARCH 20 Accumulted sur(21us Young Audience Fund (note 13) Totl =- 3 3 :;w ll Blnce t 1 April ,369,157 Trnsfer from the ccumulted surplus (9,568) Surplus for the yer 6,159,874 Blnce t 31 Mrch 2010 nd 1 April ,519,463 Trnsfer from the ccumulted surplus (4,754) Surplus for the yer 2,266,536 Blnce t 31 Mrch 20 14,781,245 The ccompnying notes form prt of these finncil sttements. 7 81,179 6,450,336 9,568 6,159,874 90,747 12,610,210 4,754 2,266,536 95,501 14,876,746

10 THE HONG KONG PHLHARMONC SOCETY LMTED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 20 :1 ;J J J J j J 1 1 J 1 J J 1 J J J J Operting ctivities Surplus for the yer Adjustments for: nterest income Deprecition Chnges in working cpitl Decrese/(increse) in ccounts nd other receivbles lncrese/(decrese) in ccruls nd other pybles (Decrese)/increse in deferred income Decrese in mount due to the Hong Kong Philhrmonic Endowment Trust Net csh generted from operting ctivities nvesting ctivities nterest received Purchse of property, plnt nd equipment Net csh used in investing ctivities Net increse in csh nd csh equivlents Csh nd csh equivlents t beginning of the yer Note Csh nd csh equivlents t end of the yer 12 The ccompnying notes form prt of these finncil sttements ,266,536 6,159,874 (20) (4 ) 1,148, ,772 3,415,276 6,810,642 1,5,873 (4,054,91 0) 1,234,317 (1,256,913) (588,154) 1,495,661 (1,000,000) (33,862) 1,158,036 (3,850,024) 4,573,312 2,960, (710,878) (448,336) (710,858) (448,332) 3,862,454 2,512,286 8,624,878 6,2,592 12,487,332 8,624,878

11 l THE HONG KONG PHLHARMONC SOCETY LMTED NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 20 = = : :: :tl : = : :tl 1. GENERAL NFORMATON The Hong Kong Philhrmonic Society Limited {the "Society") is engged in mnging nd developing the Hong Kong Philhrmonic Orchestr, to present public concerts nd to promote the pprecition of music in Hong Kong. The Society is incorported in Hong Kong under the Hong Kong Compnies Ordinnce nd is limited by gurntee. The ddress of its registered office is Level 8, Administrtion Building, Hong Kong Culturl Centre, 10 Slisbury Rod, Tsim Sh Tsui, Kowloon. Under the provisions of the Society's Memorndum nd Articles of Assocition, every voting member shll, in the event of the Society being wound up, contribute to the ssets of the Society to the extent of 1 0. At 31 Mrch 20, the Society hd 27 members (201 O: 24) members. These finncil sttements re presented in Hong Kong dollrs which is the sme s functionl currency of the Society. 2. SGNFCANT ACCOUNTNG POLCES ) Sttement of complince These finncil sttements hve been prepred in ccordnce with ll pplicble Hong Kong Finncil Reporting Stndrds ("HKFRSsn), which collective term includes ll pplicble individul Hong Kong Finncil Reporting Stndrds, Hong Kong Accounting Stndrds ("HKASsn) nd nterprettions issued by the Hong Kong nstitute of Certified Public Accountnts ("HKCPA"), ccounting principles generlly ccepted in Hong Kong nd the requirements of the Hong Kong Compnies Ordinnce. A summry of the significnt ccounting policies dopted by the Society is set out below. The HKCPA hs issued certin mendments nd interprettions which re or hve become effective. lt hs lso issued certin new nd revised HKFRSs tht re first effective or vilble for erly doption for the current ccounting period of the Society. Note 3 provides informtion on the chnges in ccounting policies resulting from initil ppliction of these developments to the extent tht they re relevnt to the Society for the current nd prior ccounting periods reflected in these finncil sttements. b) Bsis of preprtion of the finncil sttements The mesurement bsis used in the preprtion of the finncil sttements is historicl cost bsis. The preprtion of finncil sttements in conformity with HKFRSs requires mngement to mke judgements, estimtes nd ssumptions tht ffect the ppliction of policies nd reported mounts of ssets, libilities, income nd expenses. The estimtes nd ssocited ssumptions re bsed on historicl experience nd vrious other fctors believed to be resonble under the circumstnces, the results of which form the bsis of mking the judgements bout crrying vlues of ssets nd libilities not redily pprent from other sources. Actul results my differ from these estimtes. 9

12 w., l..i THE HONG KONG PHLHARMONC SOCETY LMTED NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH SGNFCANT ACCOUNTNG POLCES (Continued) b) Bsis of preprtion of the finncil sttements (Continued) The estimtes nd underlying ssumptions re reviewed on n ongoing bsis. Revisions to ccounting estimtes re recognised in the period in which the estimte is revised if the revision ffects only tht period, or in the period of the revision nd future periods if the revision ffects both current nd future periods. Judgements mde by mngement in the ppliction of HKFRSs tht hve significnt effect on the finncil sttements nd estimtes with significnt risk of mteril djustment in the next yer re discussed in note 20. c) Property, plnt nd equipment Property, plnt nd equipment re stted in the blnce sheet t cost less ccumulted deprecition nd ccumulte of impirment losses (see note 2(e)). Gins or losses rising from the retirement or disposl of n item of property, plnt nd equipment re determined s the difference between the net proceeds on disposl nd the crrying mount of the item nd re recognised in profit or loss on the dte of retirement or disposl. Deprecition is clculted to write off the cost of property, plnt nd equipment, less their estimted residul vlue, if ny, using the stright-line method over their estimted useful lives s follows: Furniture, fixtures nd equipment 5 yers Both the useful life of n sset nd its residul vlue, if ny, re reviewed nnully. f the residul vlue of n sset increses to n mount equl to or greter thn the sset's crrying mount, the sset's deprecition chrge is zero until its residul vlue subsequently decreses to n mount below the sset's crrying mount. d) Operting lese chrges Leses where substntilly ll the rewrds nd risk of ownership of ssets remin with the lesing compny re ccounted for s operting leses. Rentls pybles under such operting leses re ccounted for in the sttement of income nd expenditure on stright-line bsis over the periods of the respective leses..,., 10.,

13 : :tl : ;... : :. = : : = : 3 =-' = = :tl = = : :J :. THE HONG KONG PHLHARMONC SOCETY LMTED NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH SGNFCANT ACCOUNTNG POLCES (Continued) e) mpirment of ssets i) mpirment of receivbles ii) Receivbles tht re stted t cost or mortised cost re reviewed t ech blnce sheet dte to determine whether there is objective evidence of impirment. Objective evidence of impirment includes obse!vble dt tht comes to the ttention of the Society bout the loss events e.g. significnt finncil difficulty of the debtor; nd brech of contrct. f ny such evidence exists, ny impirment loss is determined nd recognised s follows: For receivbles crried t mortised cost, the impirment loss is mesured s the difference between the sset's crrying mount nd the present vlue of estimted future csh flows, discounted t the finncil sset's originl effective interest rte (i.e. the effective interest rte computed t initil recognition of these ssets), where the effect of discounting is mteril. f in subsequent period the mount of n impirment loss decreses nd the decrese cn be linked objectively to n event occurring fter the impirment loss ws recognised, the impirment loss is reversed through the sttement of income nd expenditure. A reversl of n impirment loss shll not result in the sset's crrying mount exceeding tht which would hve been determined hd no impirment loss been recognised in prior yers. mpirment losses re written off ginst the corresponding ssets directly, except for impirment losses recognised in respect of trde debtors included within trde nd other receivbles, whose recovery is considered doubtful but not remote. n this cse, the impirment losses for doubtful debts re recorded using n llownce ccount. When the Society is stisfied tht recovery is remote, the mount considered irrecoverble is written off ginst trde debtors directly nd ny mounts held in the llownce ccount relting to tht debt re reversed. Subsequent recoveries of mounts previously chrged to the llownce ccount re reversed ginst the llownce ccount. Other chnges in the llownce ccount nd subsequent recoveries of mounts previously written off directly re recognised in profit or loss. mpirment of other ssets nternl nd externl sources of informtion re reviewed t ech blnce sheet dte to identify indictions tht the property, plnt nd equipment my be impired, n impirment loss previously recognised no longer exists or my hve decresed. f ny such indiction exists, the sset's recoverble mount is estimted. n ddition, the recoverble mount is estimted nnully whether or not there is ny indiction of impirment. 31 : : :

14 tl tl u THE HONG KONG PHLHARMONC SOCETY LMTED NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH SGNFCANT ACCOUNTNG POLCES {Continued) e) mpirment of ssets (Continued) f) ii) mpirment of other ssets (Continued) Clcultion of recoverble mount The recoverble mount of n sset is the greter of its net selling price nd vlue in use. n ssessing vlue in use, the estimted future csh flows re discounted to their present vlue using pre-tx discount rte tht reflects current mrket ssessments of time vlue of money nd the risks specific to the sset. Where n sset does not generte csh inflows lrgely independent of those from other ssets, the recoverble mount is determined for the smllest group of ssets tht genertes csh inflows independently (i.e. csh-generting unit). Recognition of impirment losses An impirment loss is recognised in the sttement of income nd expenditure whenever the crrying mount of n sset, or the csh-generting unit to which it belongs, exceeds its recoverble mount. mpirment losses recognised in respect of csh-generting unit re llocted first to reduce the crrying mount of ny goodwill llocted to the csh-generting unit (or group of units) nd then, to reduce the crrying mount of the other ssets in the unit (or group of units) on pro rt bsis, except tht the crrying vlue of n sset will not be reduced below its individul fir vlue less costs to sell, or vlue in use, if determinble. Reversls of impirment losses n respect of ssets, n impirment loss is reversed if there hs been fvourble chnge in the estimtes used to determine the recoverble mount. A reversl of n impirment losses is limited to the sset's crrying mount tht would hve been determined hd no impirment loss been recognised in prior yers. Reversls of impirment losses re credited to the sttement of income nd expenditure in the yer in which the reversls re recognised. Accounts nd other receivbles Accounts nd other receivbles re initilly recognised t fir vlue nd therefter stted t mortised cost less llownce for impirment losses for bd nd doubtful debts, except where the receivbles re interest-free lons mde to relted prties without ny fixed repyment terms or the effect of discounting would be immteril. n such cses, the receivbles re stted t cost less llownce for impirment losses for bd nd doubtful debts (see note 2(e)). 12

15 1 :. : THE HONG KONG PHLHARMONC SOCETY LMTED NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH SGNFCANT ACCOUNTNG POLCES (Continued) g) Csh nd csh equivlents Csh nd csh equivlents comprise csh t bnk nd on hnd, demnd deposits with bnks nd other finncil institutions, nd short-term, highly liquid investments redily convertible into known mounts of csh nd which re subject to n insignificnt risk of chnges in vlue, hving been within three months of mturity t cquisition. h) Employee benefits Short term employee benefits nd contributions to defind contribution plns Slries, nnul bonuses, pid nnul leve, contributions to defined contribution plns nd the cost of non-monetry benefits re ccrued in the yer in which the ssocited services re rendered by employees. Where pyment or settlement is deferred nd the effect would be mteril, these mounts re stted t their present vlues. Contributions to the Mndtory Provident Funds s required under the Hong Kong Mndtory Provident Fund Schemes Ordinnce re chrged to the sttement of income nd expenditure when incurred. i) Other pybles Other pybles re initilly mesured t fir vlue nd therefter stted t mortised cost unless the effect of discounting would be immteril, in which cse they re stted t cost. j) Revenue recognition Provided it is probble tht the economic benefits will flow to the Society nd the revenue nd the costs, if pplicble, cn be mesured relibly, revenue is recognised in profit or loss s follows: i) Recurrent government subvention ii) Recurrent government subvention pproved for the yer is recognised on n ccrul bsis. Specific subventions nd contributions from government or sponsors Specific subventions nd contributions from the Government or sponsors, which re ermrked for specific purposes, re recognised t their fir vlue when there is resonble ssurnce tht the Society will comply with the conditions ttching to them nd tht the mount will be received. These incomes relting to costs re deferred nd recognised in the sttement of income nd expenditure over the period necessry to mtch them with the costs tht they re intended to compenste. 13

16 = THE HONG KONG PHLHARMONC SOCETY LMTED NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH SGNFCANT ACCOUNTNG POLCES (Continued) j) Revenue recognition (Continued) iii) iv) ncome from recordings ncome from recordings, musicl events, fund r1s1ng ctivities nd dvertisements re recognised when the event tke plce. For income received for future periods, they re recorded s receipts in dvnce in the blnce sheet. Sponsors' contributions Sponsors' contributions re recognised when the right to received pyments is estblished. v) nterest income nterest income is recognised on time proportion bsis, tking into ccount the principl mounts outstnding nd the interest rtes pplicble. vi) Service income Revenue from sle of services is recognised when the services re rendered.., u vii) Miscellneous income Miscellneous income is recognised on n ccrul bsis. k) Foreign currencies trnsltion ) Foreign currency trnsctions during the yer re trnslted t the foreign exchnge rtes ruling t the trnsction dtes. Monetry ssets nd libilities in foreign currencies re trnslted t the foreign exchnge rtes ruling t the yer end dte. Exchnge gins nd losses re recognised in the sttement of income nd expenditure. Non-monetry ssets nd libilities tht re mesured in terms of historicl cost in foreign currencies re trnslted t the foreign exchnge rtes ruling t the trnsction dtes. Relted prties For the purpose of these finncil sttements, prties re considered to be relted to the Society if: i) the prty hs the bility, directly or indirectly through one or more intermediries, to control the Society or exercise significnt influence over the Society in mking finncil nd operting policy decisions, or hs joint control over the Society; ii) iii) the Society nd the prty re subject to common control; the prty is n ssocite of the Society or joint venture in which the Society is venturer; 14

17 ! THE HONG KONG PHLHARMONC SOCETY LMTED NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH SGNFCANT ACCOUNTNG POLCES (Continued) ) Relted prties (Continued} iv) the prty is member of key mngement personnel of the Society or the Society's prent, or close fmily member of such n individul, or is n entity under the control, joint control or significnt influence or such individuls; v} the prty is close fmily member of prty referred to in (i} or is n entity under the control, joint control or significnt influence of such individuls; or vi} the prty is post-employment benefit pln which is for the benefit of employees of the Society or of ny entity tht is relted prty of the Society. Close fmily members of n individul re those fmily members who my be expected to influence, or be influenced by, tht individul in their delings with the entity. m) Provisions nd contingent libilities Provisions re recognised for other libilities of uncertin timing or mount when the Society hs legl or constructive obligtion rising s result of pst event, it is probble tht n outflow of economic benefits will be required to settle the obligtion nd relible estimte cn be mde. Where the time vlue of money is mteril, provisions re stted t the present vlue of the expenditure expected to settle the obligtion. Where it is not probble tht n outflow of economic benefits will be required, or the mount cnnot be estimted relibly, the obligtion is disclosed s contingent libility, unless the probbility of outflow of economic benefits is remote. Possible obligtions, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events re lso disclosed s contingent libilities unless the probbility of outflow of economic benefits is remote. 3. CHANGE N ACCOUNTNG POLCES The HKCPA hs issued number of new nd revised HKFRSs nd interprettions tht re first effective or vilble for erly doption for the current ccounting period of the Society. The ppliction of the new nd revised stndrds, mendments or interprettions hd no mteril impct on the results nd the finncil position of the Society. 4. RECURRENT GOVERNMENT SUBVENTON The government subvention is for the promotion nd development of clssicl music in Hong Kong by implementing progrmme of ctivities proposed by the Society. Dl El 15

18 THE HONG KONG PHLHARMONC SOCETY LMTED NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH CONCERT EXPENSES Slries nd llownces of musicins 42,9,473 42,3,809 Pension costs for musicins 968, ,199 Benefits for musicins (medicl nd employee compenstion) 631, ,5 Musicl instruments insurnce 202, ,149 nsurnce (lorry nd others) 70,154 95,399 Pssges (irfres for overses plyers) 766, ,958 Hotel ccommodtion for new overses plyers 50,557 15,420 Auditioning nd recruitment 1,051, ,741 Brodcsting 249, ,615 Slries, llownces nd benefits for music director/rtistic director/principl conductor/resident conductor 7,336,395 7,579,775 guest rtists 13,907,709 9,445,145 Fees of ugmenttion/freelnce plyers 1,975,921 1,972,487 Hire of hlls 5,788,558 5,415,876 Trnsporttion of plyers 47,855 18,653 Trnsporttion of instruments 69,739 82,338 Trnsporttion of rtists 93,300 58,355 Hire/repirs/mintennce of instruments 281, ,288 Music hire nd rrngement 555, ,022 Sundries for orchestr 321, ,058 Musicl instruments nd scores 94, ,530 Stge design nd setting fee 2,271,002 2,139,970 Sound 1,219,128 1,452,488 Fee pid to CASH 12,038 Musicl instruments deprecition (note 10) 885, ,384 Touring expenses 2,047, ,798,730 74,920, MARKETNG AND AUDENCE DEVELOPMENT EXPENSES Posters nd pmphlets 938, ,590 Progrmmes 999, ,213 Press dvertisements 2,499,519 2,701,396 Photogrphy 199, ,818 Ul g ;J Other expenses 63,555 35,704 Subscription costs 6, ,813 Web development nd mintennce 368, ,409 Public reltions nd udience development 337, ,885 Direct miling 208, ,644 Ticketing cost 823, ,637 Ticket commission 389, ,163 7,437,75 0 7,375,272 ll lj 16

19 : :tl THE HONG KONG PHLHARMONC SOCETY LMTED NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH ADMNSTRATVE AND GENERAL EXPENSES Slries of office stff,625,889 12,727,606 Pension costs for office stff 326, ,055 Benefits (medicl insurnce) for office stff 236, ,769 Operting lese rentls for office premises nd workshop 1,192,356 1,081,259 Postge, sttionery, fx nd telephone 305, ,582 Utilities nd sundry expenses 222, ,576 Repirs nd mintennce 139, ,519 Locl trvelling 19,551,378 Overses trvelling 10, ,184 Professionl fees 338,442 92,127 Recruitment of stff 671,571 14,807 Entertinment 48,722 34,878 Deprecition (note 10) 262, ,388 15,399,679 15,478, TAXATON The Society, being registered chritble orgniztion, is exempted from Hong Kong profits tx under Section 88 of the Hong Kong nlnd Revenue Ordinnce. 9. BOARD OF GOVERNORS MEMBERS' EMOLUMENTS (EQUVALENTS TO KEY MANAGEMENT COMPENSATON) None of the members of the Bord of Governors, who re considered s key mngement of the Society, received ny fees or emoluments in respect of their services to the Society during the yer {201 0: Nil)

20 :tl 3 THE HONG KONG PHLHARMONC SOCETY LMTED NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH PROPERTY, PLANT AND EQUPMENT Cost At 1 April 2009 Additions At 31 Mrch 2010 nd 1 April 2010 Additions At 31 Mrch 20 Accumulted deprecition At 1 April2009 Chrge for the yer At 31 Mrch nd 1 April 2010 Chrge for the yer Furniture, fixtures nd equipment 4,989,4 448,336 5,437, ,878 6,148,625 2,360, ,772 3,0,324 1,14 8,760 g 3 Ul At 31 Mrch 20 Crrying mount At 31 Mrch 20 At 31 Mrch ,160,084 1,988,541 2,426,423 Deprecition chrges of 885,936 nd 262,824 (201 0: 405,384 nd 245,388) hve been expensed nd included in concert expenses (note 5) nd dministrtive nd generl expenses (note 7) respectively. 3 3 tl 18

21 THE HONG KONG PHLHARMONC SOCETY LMTED NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 20. ACCOUNTS AND OTHER RECEVABLES 12. Accounts receivble Other receivbles Lons nd receivbles Prepyments. 20 4,665, ,254 5,306,827 3,813,250 9,120, ,337,568 1,139,312 6,476,880 4,155,070 10,631,950 The geing nlysis of ccounts receivble tht re neither individully nor collectively considered to be impired re s follows: Neither pst due nor impired Pst due but not impired Less thn 1 month pst due 1 to 3 months pst due 20 4,238, ,240 58, ,845 4,665, ,680,600 1,656,968 5,337,568 Receivbles tht were neither pst due nor impired relte to wide rnge of donors, sponsors nd ticket income receivbles for whom there ws no recent history of defult. Receivbles tht were pst due but not impired relte to number of independent donors or sponsors tht hve good trck record with the Society. Bsed on pst experience, the Bord of Governors believes tht no impirment llownce is necessry in respect of these blnces s there hs not been significnt chnge in credit qulity nd the blnces re still considered fully recoverble. The Society does not hold ny collterl over these blnces. CASH AND CASH EQUVALENTS Csh t bnks nd on hnd 12,487,332 8,624,878 Csh nd csh equivlents in the blnce sheet nd the sttement of csh flows 12, ,624,878 19

22 t ll THE HONG KONG PHLHARMONC SOCETY LMTED NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH YOUNG AUDENCE FUND Blnce brought forwrd Trnsfer from the ccumulted surplus Blnce crried forwrd 20 90,747 4,754 95, ,179 9, ,747 The Young Audience Fund is progrmme to enhnce nd develop musicl interest nd tlent of the youth. The funding of this reserve is set side from ccumulted surplus. 14. ACCRUALS AND OTHER PAYABLES Accruls 1,272, ,701 Other pybles 3,139,922 2,721,48 6 Finncil libilities mesured t mortised cost 4,4,937 3,630,187 Receipts in dvnce 2,889,756 2,437, DEFERRED NCOME 7,301,693 6,067,376 Outbound Venue culturl prtnership Swire exchnge scheme projects Totl At 1 April , , ,764 Government subventions 1,500,000 1,775,830 3,275,830 Other subventions 12,500,000 12,500,000 Credited to the sttement of income nd expenditure {1,780,169) p 2,500,000) { 14,280,169) At 31 Mrch 2010 nd 1 April2010 1,500, , ,000 2,187,425 Government subventions 1,500,000 1,775,830 3,275,830 Other subventions 12,750,000 12,750,000 Credited to the sttement of income nd expenditure {1,700,729) {2, 163' 255) {12,750,000) (16,613,984) At 31 Mrch 20 1,299, ,000 1,599, AMOUNT DUE FROM/(TO) THE HONG KONG PHLHARMONC ENDOWMENT TRUST The mount is unsecured, interest-free nd repyble on demnd. 20

23 THE HONG KONG PHLHARMONC SOCETY LMTED NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH FNANCAL RSK MANAGEMENT OBJECTVES AND POLCES The Society's mjor finncil instruments include ccounts nd other receivbles, ccruls nd other pybles, deferred income nd csh nd csh equivlents. Detils of the finncil instruments re disclosed n respective notes. The risks ssocited with these finncil instruments include credit risk, liquidity risk, currency risk nd interest rte risk. The policies on how to mitigte these risks re set out below. The mngement mnges nd monitors these exposures to ensure pproprite mesures re implemented on timely nd effective mnner. ) Credit risk b) Credit risk is primrily ttributble to receivbles from sponsors, the musicl tickets receivbles from the Leisure nd Culturl Services Deprtment nd bnk blnces. n respect of receivbles from sponsors nd the musicl tickets receivbles from the Leisure nd Culturl Services Deprtment, the Bord of Governors is in the opinion tht the credit risk is considered to be low s the counterprties re Government nd sponsors with no history of defult pyment nd good reputtion. The credit risk on the liquid funds is limited becuse the counterprties re bnks with high credit rting ssigned by interntionl credit rting gencies. The mximum exposure credit risk is represented by the crrying mount of ech finncil sset in the blnce sheet. Liquidity risk Prudent liquidity risk mngement implies mintining sufficient csh nd bnk blnces. n the opinion of the Bord of Governors, the Society does not hve ny significnt liquidity risk. The following liquidity nd interest risk tbles set out the remining contrctul mturities t the blnce sheet dte of the Society's finncil libilities bsed on contrctul undiscounted csh flows (including interest pyments computed using contrctul rtes or, if floting, bsed on rtes current t the blnce sheet dte) nd the erliest dte the Society required to py: Less thn one yer: Accruls nd other pybles Amount due to the Hong Kong Philhrmonic Endowment Trust ,4,937 4,4, ,630, ,240 4,448,427

24 ; ll ll ;s THE HONG KONG PHLHARMONC SOCETY LMTED NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH FNANCAL RSK MANAGEMENT OBJECTVES AND POLCES (Continued) c) d) e) Csh flow interest rte risk Other thn the short-term bnk deposits which crry interest t mrket rtes, the Society hs no significnt interest-bering ssets or libilities. Accordingly, the Society's income nd operting csh flows re substntilly independent of chnges in mrket interest rtes. n the opinion of the Bord of Governors, the exposure to csh flow interest rte risk is considered to be low nd no sensitivity nlysis is performed ccordingly. Foreign currency risk Foreign exchnge risk rises where future commercil trnsctions nd recognised ssets nd libilities re denominted in currency tht is not the Society's functionl currency. The Society opertes in Hong Kong. n the opinion of the trustees, the Society hs miniml exposure to the foreign exchnge s the trnsctions re minly denominted in Hong Kong dollr nd no sensitivity nlysis is performed ccordingly. Fir vlues The fir vlues of csh nd csh equivlents, other receivbles nd other pybles re not mterilly different from their crrying mounts becuse of the immedite or short term mturity of these finncil instruments. 18. FUND RSK MANAGEMENT The Society's objective when mnging funds re to sfegurd the Society's bility to continue s going concern in order to support the dily opertions of the Society nd to mintin n optiml structure of funds to reduce the cost of funds. The Society's overll strtegy remins unchnged from prior yer. The structure of funds of the Society consists of ccumulted surplus nd Young Audience Fund. n order to mintin or djust the structure of funds, the Society my ppel for dontions from the Hong Kong Government nd the generl public. 19. COMMTMENTS UNDER OPERATNG LEASES At 31 Mrch, the Society hd future ggregte minimum lese pyments under non-cncellble operting leses s follows: Office premises nd workshop No lter thn 1 yer Lter thn 1 yer nd no lter thn 5 yers , ,000 1,668, ,130,556 1,127,019 2,257,575

25 :i1!i1 :il : :1 ' ll ll THE HONG KONG PHLHARMONC SOCETY LMTED NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 31 MARCH ACCOUNTNG ESTMATES AND JUDGEMENTS ) Key sources of estimtion uncertinty b) n the process of pplying the Society's ccounting policies which re described in note 2, the Bord of Governors hs mde certin key ssumptions concerning the future, nd other key sources of estimted uncertinty t yer end dte, tht my hve significnt risk of cusing mteril djustment to the crrying mounts of ssets nd libilities within the next finncil yer, s discussed below. Useful lives of property, plnt nd equipment The Society determines the estimted useful lives for its property, plnt nd equipment. This estimte is bsed on the historicl experience of the ctul useful lives of property, plnt nd equipment nd investment properties of similr nture nd functions. The crrying mount s t the end of reporting period is 1,988,541 (2009: 2,426,423). Criticl ccounting judgements in pplying the Society's ccounting policies n determining the crrying mounts of some ssets nd libilities, the Society mkes ssumptions for the effects of uncertin future events on those ssets nd libilities t the yer end dte. These estimtes involve ssumptions bout such items s csh flows nd discount rtes used. The Society's estimtes nd ssumptions re bsed on historicl experience nd expecttions of future events nd re reviewed periodiclly. n ddition to ssumptions nd estimtions of future events, judgements re lso mde during the process of pplying the Society's ccounting policies. 21. COMPARATVE FGURES With review of finncil sttements presenttion, certin items in the finncil sttements were reclssified which would result in more pproprite presenttion of events or trnsctions. Accordingly, certin comprtive figures hve been reclssified to conform with the current yer's presenttion. 22. POSSBLE MPACT OF AMENDMENTS, NEW STANDARDS AND NTERPRETATONS SSUED BUT NOT YET EFFECTVE FOR THE YEAR ENDED 31 MARCH 20 Up to the dte of issunce of these finncil sttements, the HKCPA hs issued number of mendments, new nd revised stndrds nd interprettions which re not yet effective for the yer ended 31 Mrch 20 nd which hve not been dopted in these finncil sttements. The Bord of Governors of the Society nticiptes tht the ppliction of the new stndrds, mendments or interprettions will hve no mteril impct on the results nd the finncil position of the Society. 23

26 (FOR MANAGEMENT NFORMATON PURPOSES ONLY) THE HONG KONG PHLHARMONC SOCETY LMTED STATEMENT OF NCOME AND EXPENDTURE - VENUE PARTNERSHP SCHEME AND OUTBOUND CULTURAL EXCHANGE FOR THE YEAR ENDED 31 MARCH 20 Venue Prtnership Scheme Outbound Culturl Exchnge ncome Government subvention Fund rising ctivities nd sponsors' contributions Expenditure Concert expenses Mrketing nd udience development expenses Administrtive nd generl expenses Surplus for the yer 2,163,255 1,700,729 2,542,374 1,813,486 4,170, ,397 72,873 82,372 2,163,255 4,243,103