''All in all, we are operating in a high-risk environment in coming years, exacerbated by the disruption to our operations and revenues that will flow from the [Walsh Bay] Wharf renewal project,'' Mr Narev said in the company's annual report released on Wednesday.

STC’s production and scenic art departments have moved from Piers 4 and 5 at Walsh Bay, with other departments to follow, in anticipation of the building work that will mark the first major refurbishment since the wharf was established as the company's headquarters in January 1984.

The NSW government has committed half of the $60 million total cost with the company raising the additional funds required. The company is close to reaching that milestone.

Last year marked the first year with Kip Williams as artistic director. Mr Williams described 2017 as a monumental year for the company, in which The Present appeared on  Broadway.

''The production was a true culmination of former artistic directors Andrew Upton and Cate Blanchett’s work to further establish Australian theatre on the world stage,'' Mr Williams said, adding he was delighted Ms Blanchett's performance had been recognised with a Tony Award nomination for best actress.

The STC's highest-selling show last year was Muriel’s Wedding The Musical,  which ran into 2018 and saw 75,653 people pay to attend 92 performances at Roslyn Packer Theatre.

Overall, the annual report revealed 282,592 people attended STC productions last year, down on the  303,661 who attended in 2016.

“STC ended 2017 in a stronger financial position overall,” said Mr Narev.

“Our operating deficit, whilst significant on its face, was driven by around $1.8 million of timing adjustments between the 2017 and 2018 reporting periods.''

These included, he said, the accounting treatment of Muriel’s Wedding: while most of the costs were incurred last year, most of its profit would accumulate in 2018.

“Excluding depreciation of $1.2 million, STC had a $1.2 million cash loss,'' Mr Narev said. ''This was due to the cancellation of a fundraising event to farewell the Wharf ahead of the planned renewal project; the conclusion of a major sponsorship, and a larger than anticipated expenditure on repairs and maintenance.

"We never take operating deficits lightly. They remind us that non-profit cultural institutions have an inherent financial vulnerability. However, we have been accumulating reserves over the past few years to allow us to produce ambitious programs, and to manage the disruption from our Wharf renewal project.”