Annual Report 2017-2018

THE AMERICAN CLUB

NOTES TO FINANCIAL STATEMENTS 30 June 2018

12. CLUB FUNDS

Capital Fund comprises mainly Net Investment in Property, Plant and Equipment, Renewal and Replacement Fund, Security Fund and Legacy Fund. Entrance fees, interest, investment income, investment management expenses and allowance for impairment in value of investments, depreciation, gain or loss on sale of property, plant and equipment and a portion of taxation are attributable to the Capital Fund. All other income and expenses are attributable to the Operating Fund.

(a) Operating Fund comprises three components:

(i) A bank guarantee account;

(ii) A working capital component needed on demand or with short notification periods to meet operating cash flow timing needs; and

(iii) Operating surpluses brought forward from prior years.

The Operating Fund may be utilised for operating expenses approved by the General Committee. If the Operating Fund has been drawn down for unbudgeted operating expenses, it will be topped up with funds from the Legacy Fund at the end of the reporting period. (b) Net Investment in Property, Plant and Equipment comprises the net book value of property, plant and equipment including an asset revaluation reserve of $2,304,416 arising from the revaluation of The Clubhouse building and land in 1972. (c) Renewal and Replacement Fund comprises accumulated entrance fees and investment earnings and losses. A portion of the Renewal and Replacement Fund earnings is being accumulated towards the eventual cost of major replacements at the Club and the remainder of earnings to be used for annual renewal and replacement expenditures.

(d) Security Fund comprises a principal invested to generate earnings to be used for the additional security expenses The Club incurs due to its unique profile.

(e) Legacy Fund comprises of the remainder of the Capital Fund not otherwise designated, including unrealised gains and losses on investment securities. Earnings from the Legacy Fund are being accumulated for future improvements and expansion and are available to fund annual maintenance upon the recommendation of the Finance Committee and approval of the General Committee.

The basis of allocation among the various fund designations will be adjusted periodically in response to the prevailing market conditions for investments.

55 2017/18 ANNUAL REPORT