Annual Report 2016/2017 - The American Club Hong Kong … · The American Club nnal Report 2012017 1 Board of Governors 2017 From left to right Bottom row: Jim Robinson (Secretary),

Annual Report 2016/2017

TOWN CLUBFloors 48 & 49, Two Exchange Square, Central, Hong Kong

COUNTRY CLUB28 Tai Tam Road, Tai Tam, Hong Kong

Telephone : (852) 2842 7400Facsimile : (852) 2147 3867Email : [email protected] : www.americanclubhk.com Designed by www.linkupdesign.com

Mission StatementWe are dedicated to being a premier Club in Hong Kong which provides a gathering place for social, recreational and business activities for Members and their families in a distinctive American atmosphere.

In achieving our mission, we will......

• MaintainacommitmenttoanAmericanidentity.• MaintainaClubenvironmentwhichisopen and hospitable.• Providequalityservicesandproductsatafair value.• Maintainfiscalresponsibility.• Projectapositiveimagewithinourcommunity.• BeresponsivetoourMembers.

1The American Club Annual Report 2016-2017

Board of Governors 2017

From left to rightBottom row: Jim Robinson (Secretary), Kevin Tranbarger (Vice President, appointed on May 1, 2017), Robert Chipman (President) and Matthew Creedon (Treasurer)Middle row: Patrick Kaye, Anthony Barnes, Sarah Merrill Mowat, Peter Kaminsky and Bruce VonCannonTop row: Shih-Wei Peng (resigned on June 19, 2017), Richard Johannessen, Jason Bajaj and Yash Rana (Ex-Officio)Not present:Gail McDermott (resigned on January 23, 2017)

2 The American Club Annual Report 2016-2017

Contents

3 President’s Report

6 Finance Committee Report

9 Membership Committee Report

12 Development Committee Report

14 Social Committee Report

17 Fitness and Recreation Committee Report 20 Food and Beverage Committee Report 22 Governors’ Report

26 Auditor’s Report


Dear Members,

It has been an honor and privilege to serve as the 86th President of The American Club Hong Kong; one of the best clubs in Asia, if not the world. It has been especially poignant with 2017 being the 20th Anniversary of the Establishment of the Hong Kong Special Administrative Region. It’s hard to believe it is 20 years since I watched from the terrace on the 48th Floor of the Town Club, in the pouring rain, as the Royal Yacht Britannia sailed away from Victoria Harbor. There have been many changes for Hong Kong, and for the Club, since then but both are in a strong position to face the challenges of the next 20 years.

Once again, this year has been a very busy one for the Club and the Board has spent considerable time this year on two major development projects, namely the renovation of the Town Club fitness center and planning how to implement the projects under Phase 1 of the Country Club Master Plan.

On July 3, 2017, the Town Club fitness center closed for refurbishment and re-opened in the beginning of September. When an area of the Club closes to Members, we know it is an inconvenience so we thank you for your generous patience and continued support. More information on this is contained in the F&R Committee Report.

Many, many meetings and many, many hours of work took place this year to develop the details of Phase 1

of the Country Club Master Plan. This includes an expansion of the Adult Pool Deck with a bar at one end and a plunge pool at the other. It also includes the conversion of one of the Squash Courts into a golf theater with two bays for simulators. One will be primarily for recreation and the other primarily for instruction. These projects are planned to start in November this year with two other projects, improvements to Chill, Crash and Joe’s and a renovation to the Fireside, scheduled for the summer next year. To read more about these projects, see the Development Committee Report.

Fiscal Year 2016/17 Financial Performance

We ended the previous fiscal year 2015/16 with an overall operating deficit of around $5.3 million, which was one of our best years in recent times. The performance was especially impressive considering part of the Town Club was closed during the year. It also reflected $3 million in one-time expenses. In addition, we significantly lowered F&B prices to provide Members with exceptional value for money.

This fiscal year 2016/17, we finished in an even stronger financial position with an overall operating surplus of around $7.8 million. Member usage of both clubhouses, particularly the Town Club on weekdays and the Country Club at weekends, has been extremely high and, thanks to Management’s continued focus on improving operational efficiencies, we ended this financial year in the black – the first time for a very long time indeed. Our General Manager, David Loan,

President : Robert Chipman Vice President : Gail McDermott (resigned on January 23, 2017)

Kevin Tranbarger (appointed on May 1, 2017)

Treasurer : Matthew Creedon Secretary : Jim Robinson Board Members : Anthony Barnes Bruce VonCannon Charles Wellins (resigned on January 1, 2017)

Jason Bajaj (appointed on January 1, 2017) Patrick Kaye Peter Kaminsky (appointed on January 1, 2017) Rick Johannessen (appointed on January 1, 2017) Sarah Merrill Mowat Shih-Wei Peng (resigned on June 20, 2017)

Yash Rana (Ex-Officio)

President’s Report

PresidentRobert Chipman



has been with us for almost three years now. During our GM search process in 2014, he impressed the Board with his attention to the financial performance of the clubs he managed. David has certainly instilled new financial discipline that the Club has not enjoyed for many years.

The chart below shows the Club’s historical operating performance for the last 10 years. Please note that in FY14/15 and FY15/16, parts of the Town Club were closed for renovation.

Another important project we undertook this year was the relocation of staff based in the Club’s rented offices in North Point. I’m pleased to report that we were able to move half of the staff (Membership, Marketing and HR Teams) from North Point to our existing staff facilities on Connaught Road across the street from the Town Club. The other half (Finance Team) relocated to an unused back of house area in the Country Club. This will result in savings of about $1.8 million per year.

Fiscal Year 2017/18 Budget

For FY17/18, our management team spent many, many hours developing departmental budgets that are fiscally responsible while continuing to provide Members with exceptional value and further enhance the overall Member experience. Management recommended a breakeven operating budget, and which includes the cost of moving to a five-day workweek for all our F&B staff. Rest assured, we aim to maintain our low menu prices, which are popular with Members and provide exceptional value for money.

Subject to approval by our Members at the Annual General Meeting on November 22, 2017, we have proposed a modest increase in monthly dues of $80 for Full Members, and $40 for One Year Temporary and Town Club Only Members effective January 1, 2018. As a Board, we did not arrive at this decision lightly, and before making this decision, the Board, Finance and Membership Committees considered various factors. In addition, we urge management to take additional steps to improve operating efficiencies regardless of any dues increase.

Total Club Operating Profit / (Loss)

$10

$8

$6

$4

$2

$0

($2)

($4)

($6)

($8)

($10)FY07/08 FY08/09 FY09/10 FY10/11 FY11/12 FY12/13 FY13/14 FY14/15 FY15/16 FY16/17

HK$ (million)



Our philosophy is, as it has always been, to keep dues increases to a minimum. The Strategic Plan Report approved in December 2012 states “dues should be evaluated annually to see that they remain in step with inflation and that outsized one-time increases are avoided as much as possible”.

To give some perspective, in 2005, our monthly dues were $2,200. Today, for Full Members, they are $2,570. This is a cumulative increase of less than 10% over 12 years. If Members approve the $80 increase we are proposing, it will mean we have increased dues by just over $30 a year between 2005 and 2018. This is significantly lower than the increases in our costs, in inflation and in the CPI index. We hope we have the support of Members when this is voted on at the Annual General Meeting in November.

Finally, I would like to thank the 2017 Board of Governors who has worked tirelessly in the best interests of the Club and its Members. I would especially like to thank the Executive Committee - Kevin Tranbarger as Vice President, Jim Robinson as Secretary and Matt Creedon as Treasurer for working closely with me to keep the Club on track. In addition, special thanks also go to our General Manager, David Loan, his Senior Management Team and the entire Club Staff for all their hard work and loyalty to the Club. It has, once again, been an exciting, challenging and successful year in the Club’s long and proud history.


Finance Committee Report

The Finance Committee plays a vital role in ensuring responsible, realistic fiscal management of the American Club’s monetary resources. The Committee has a number of ongoing responsibilities, most notably being the in-depth review and analysis of our monthly financial results. The Committee is heavily involved in the drafting, review and eventual acceptance of the Club’s annual budget. The Committee also closely monitors the Club’s substantial investment portfolio. Lastly, the Committee interacts with all the other

Committees to give input on the financial implications resulting from major decisions that they may recommend to the Board.

Review of Fiscal Year 2016/17

The Club enjoyed an extremely good financial performance this year ending with an operating surplus of $7.8 million compared to a budgeted operating loss of $0.8 million. Every month the Finance Committee

Operating Surplus/Deficit (before depreciation)

$10

$8

$6

$4

$2

$0

($2)

($4)

($6)

($8)

($10) 2013/14 2014/15 2015/16 2016/17

HK$ (million)

Chair : Matthew Creedon Vice Chair : Jason Bajaj Committee Members : Anthony Arnaudy (resigned on June 6, 2017)

Anthony Carango Caroline Simon-Michel David Zeiden Kenneth Rehmann Kevin Tranbarger Randall DeBastiani Steve Winegar Thomas Elliot

ChairMatthew Creedon

($7.1) ($7.9)

($5.3)

$7.8



would review different key performance indicators (KPIs) including revenue, payroll and operating expenses by individual departments. In addition we would review the F&B revenue mix, in terms of a la carte, private events and club events all of which have different cost percentages. Another area for review would be to compare F&B covers and average check both against budget and last year, as well as variances between the Town Club and Country Club.

Revenue vs. Expenses

Total operating revenue fell short of budget by $0.5 million but increased by $25.1 million or 11.4% when compared to last year. The total F&B covers and average check were all in line with the budget. The operating surplus exceeded budget by $8.6 million mainly due to very good cost and expense control.

Capital Expenditure

Two major Capital Expenditure initiatives the Finance Committee was particularly involved in this year were both IT related namely a Network Compromise Assessment and Security Improvement Project and the introduction of a new Club Management System.


Revenue Attribution

$300

$250

$200

$150

$100

$50

$02013/14 2014/15 2015/16 2016/17

F&BMember Services Others

HK$ (million)

Total Operating Revenue vs Expenses

$275

$250

$225

$200

$175

$150

$125

$100

$75

$50

$25

$02013/14 2014/15 2015/16 2016/17

HK$ (million)

Total Operating Revenue Cost of Sales Employee Benefit Expense

Operating Expenses Central Office Rental

Given the Club has 2,963 Members we need to do what we can to safeguard sensitive membership information. Funds were approved in the FY16/17 Capital Expenditure Budget to carry out a network compromise assessment, incident response (if necessary),

46%

38%

16%

51%

33%

16%

48%

36%

16%

46%

38%

16%

100%

23%

49%

28%

100%

23%

50%

28%

100%

24%

50%

27%

100%

25%

45%

25%

3% 3% 2% 1%


and a creation of a security improvement plan. Following a security assessment conducted by an external company, the Club’s IT team developed a strategy to rectify any issues discovered most of which are low cost. In addition we enhanced our network’s firewalls in each location while also improving our network broadband.

Also included the FY16/17 Capital Expenditure Budget were funds to replace the Club’s existing i-Club system with a new Club Management System (CMS) along with new Point of Sales (POS) System and Table Management System (TMS). This was a major back-of-house project for the Club’s IT team who worked hard to ensure successful implementation from July 1, 2017.

Investment Portfolio and Cash Flow

Our passive, index-matching strategy of our investment portfolio has proved, once again, to be successful this year as our investment manager Blackrock has been right on target with the overall portfolio growing by 3.3.% (net of management fee). The Club continued to take a prudent risk/reward view by allocating 30% to global equities and 70% to global bonds. Year to date the ACWI Equity Index Fund gained 19.2%, above the benchmark by 0.4% and the Global Aggregate Bond Index Fund loss 2.3%, slightly below the benchmark by 0.1%. The Finance Committee continued the practice of asking BlackRock to present regular reviews of the portfolio’s performance as well as providing rebalancing recommendations.

The Club’s cash flow remains healthy with total liquid assets of $156 million at the close of the financial year and the Finance Committee will dedicate time over the remainder of the year to further develop a 10 year plan to identify what cash the Club requires for its future capital developments.

Fiscal Year 2017/18 Budget Highlights

As usual, the basic assumption when building the FY17/18 Operating Budget was that it had to be at breakeven. However, the Club was also committed to implementing a five day work week for the all Food and Beverage employees in order to increase staff morale and improve recruitment and retention, which is also a standard for hotels and some of the other premier clubs in Hong Kong. This does, however, represent a significant cost to the Club. In addition, the budget includes the same number of Members (so to preserve the Member experience at the Club), an increase in F&B revenue of approximately 5% driven largely by an increase in private events, and menu prices based on the same food cost percentages which we’ve operated at this year.

We only ever consider a dues increase as a last resort to balance the budget, although a small dues increase annually in line with inflation (rather than a large increase every few years to catch up with rising costs) was recommended in the Strategic Plan. As such, the Finance Committee and Board of Governors approved recommending a small dues increase of approximately 3% dues ($80 for Full Members and $40 for Town Only Members and One-Year Temporary Members) from January 1, 2018. We hope we have the support of Members to keep the Club’s healthy financial position.

The Club has benefited from an excellent Finance Committee this year with some very knowledgeable, dedicated, talented and hardworking Members including Vice Chair Jason Bajaj, Anthony Arnaudy, Anthony Carango, Caroline Simon-Michel, David Zeiden, Kenneth Rehmann, Kevin Tranbarger, Randall DeBastiani, Steve Winegar and Thomas Elliot. They have my sincere thanks for selflessly donating their time and effort to serve the Club.


Net Investment Gain

$35

$30

$25

$20

$15

$10

$5

$02013/14 2014/15 2015/16 2016/17

HK$ (million)

$32.6

$8.9

$22.7

$15.4


Membership Committee Report

Our membership is at the heart of everything the American Club does. Our Members comprise a dynamic mix of people of many ages, nationalities, cultures and backgrounds. It is the job of the Membership Committee to ensure this continues while still being true to the Club’s mission statement of being a premier Club in Hong Kong which provides a gathering place for social, recreational, and business activities for Members and their families in a distinctive American atmosphere.

At the end of the fiscal year on June 30, 2017, total membership numbers were 2,963 very similar to where we finished the previous fiscal year. There continues to be strong interest from individuals and families wanting to join the Club and as such we maintain a waitlist to manage membership levels to the maximum limit determined by the Board.

3,000

2,000

1,000

02007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

2,965 2,966

2,804 2,825 2,7872,871 2,912 2,923 2,980 2,973

Chair : Sarah Merrill Mowat Vice Chair : Rick JohannessenCommittee Members : Michael Dorschner (resigned on July 22, 2017) Jeff Faiola James Fallon James Grandolfo Shafi Imran Paul Kingston Stacey Prescott (appointed on August 28, 2017) Zachary Schwartz Carolyn Wingard-Robertsson

ChairSarah Merrill Mowat

2,963

Full Members Town Club Members One-Year Temporary Members

Membership Numbers



Membership Types

The percentage of debenture members vs. individual members remains constant at 33% vs. 67% with individual members continuing to account for just over 2/3rds of the total membership.

Membership by Nationality

The percentage of Members holding U.S. passports remains steady accounting for 55% of the total membership.

Membership by Age

Overall the age distribution of our Members has remained steady over the past year. However, we continue to work to attract younger members through membership programs designed to specifically appeal to younger people, namely the Young American Individual Membership, for those younger than 36 years old, and the American Individual Legacy Membership, in which the adult children of long-time Members can apply for their own membership at a heavily discounted entrance fee.

Membership by Duration

The Club continues to enjoy a very low turnover rate of American Individual Memberships. This strengthens our sense of community, as nearly 2/3rds of our Members have been a part of the Club for more than five years.

Debenture Members

33% Individual Members

67%

51-60 years31%

41-50 years34%

31-40 years12%

Over 80 years4%

21-30 years13%

1-2 years15%

11-20 years22%

American55%

Hong Kong13%

Canadian6%

Others15%

British11%

61-70 years12%

71-80 years5%

26-30 years2%

5-10 years19%

3-4 years11%

Less than 1 years10%

Over 30 years10%


The Membership Committee plays an important role in recommending to the Board and assisting Management in a wide range of membership issues. The roles and responsibilities of the Membership Committee are both strategic and operational in nature. In addition to reviewing the membership report every month, considering policy exception requests and approving membership transactions, the Committee completed a number of other initiatives this year.

For the first half of the year, the Committee focused on reviewing the rights, privileges and caps of all membership categories, the rights and privileges of waitlisted candidates, and determining the most appropriate level of membership fees including monthly dues. These membership issues relate to the development of the annual budget because they impact the size of the membership, the type of membership programs offered and the amount received from subscription fees. The feedback of the Membership Committee, along with that of other Committees, flows into the drafting of the budget before it is presented to the Finance Committee and the Board for final approval.

Following a review of the debenture nomination process, the Committee recommended that debenture nominees must be endorsed by an existing Member in addition to being proposed for membership by the debenture holder. While the debenture holder still retains the right to propose a debenture nominee, the endorsement of an existing Member ensures that they are acquainted with the candidate and can personally vouch for their behavior and appointment as a Member.

In its review of the various membership categories, the Committee approved to cease offering the American Individual Term Membership program from July 1, 2017. This program has not proved popular with applicants, and given that the Club has a two-year waitlist, it does not currently need to offer a payment-plan membership program to attract new Members. The Committee also approved a change in the payment schedule of those Members joining the Young American Individual Membership (AIMY) program. Although the total amount paid over the six-year period will remain the same, the payment schedule has been changed to $50,000 per annum for the first five years with the remaining balance of $188,000 due in the sixth year. It is hoped that this will attract more AIMY waitlist candidates to apply for the Interim One Year Temporary Membership (OYTM) which has a slightly lower annual fee. The new payment schedule is only applicable to new candidates who apply on or after July 1, 2017 so will not affect any existing

AIMY Members or waitlist candidates. Also as part of this review, the Membership Committee voted unanimously to confer spousal rights to all couples who are married and can produce a valid marriage certificate, regardless of the gender of both spouses.

The Committee also considered how to incentivize candidates who are waitlisted for American Individual Memberships (with the exception of Legacy candidates) to join the Interim One Year Temporary Membership program. Following many months of discussions, the Committee voted to offer waitlisted candidates a 1% discount on their entrance fee for every month that they are Interim One Year Temporary Members, up to a maximum discount of twenty per cent. The objective of this was not financial, as although the additional annual fees, monthly dues and Club spending will increase the Club’s operating income, the entrance fee discount will decrease non-operating income. The intention is to enable Americans to use both Clubhouses during non-peak times (the Country Club on weekdays and the Town Club on weekends) while they await permanent membership.

The rest of the year will be equally busy for the Membership Committee. We will discuss the weekend guest policy at the Country Club with particular focus on areas that experience heavy use (the pool, Bay Cafe, parking). We will review the current policy and its effectiveness in the hope of ensuring a better experience for all Members. We will also review the Heritage and Heritage Plus Membership programs and whether the original terms of each category are still appropriate. The Heritage Memberships were designed to allow Individual Members to convert their status to inactive when moving from Hong Kong, while retaining limited access to the Club on any return visit.

Finally, I would like to thank the Members of the Membership Committee for their hard work this year along with their endless dedication and support of the Club. Not only do they attend our monthly meetings, but they also volunteer their time to meet and share their insight about the Club with potential new members as part of the membership application process. I hope they have found being on the committee an interesting and valuable experience. I would also like to give special thanks to the Club’s management and staff, in particular the membership team, who work with the Membership Committee to ensure the seamless running of our meetings, membership candidate interview sessions and various other membership activities.



Development Committee Report

The Development Committee had a number of challenging goals and objectives to complete this year. The majority of our time was spent on implementing the Town Club's 49th floor Fitness Center and Changing Rooms enhancement works; upgrading and replacing the Country Club's aging mechanical and electrical equipment; and carrying forward the planning and concept design for the Country Club's Phase 1 Master Plan projects.

Town Club: Fitness Center and Changing Rooms Enhancement Works

These extensive renovation and enhancement works commenced on July 3, 2017 and were completed in two months’ time. The works involved changing the flooring in the gym, relocating the reception desk, re configuring both the male and female changing rooms, and installing new steam and sauna room equipment. During the works period, the Fitness Centre was closed with Members having the opportunity to use the nearby Pure Fitness centers.

Country Club: Mechanical and Electrical Equipment Upgrades and Replacement Works

Chiller Replacement WorksThe Club has been living on "borrowed time" for many years now with its existing chiller installations which are located below the main pool deck near the Eagle's Nest. Comprehensive engineering design options have

been prepared by our consultant and approved for tendering by the Committee with special design review assistance from Member Pat Hall. Unfortunately, the Club's Tai Tam facility resides in a special "water restriction zone" according to current Water Supplies Department Guidelines, and it proved impossible to get the Hong Kong Government to relax their restrictions on water-cooled chillers for our air-conditioning needs. Therefore, the alternative design option for air-cooled chillers was adopted and the new installation should be completed, tested and commissioned by May 2018.

Electrical Bus Duct Replacement and Upgrade WorksClub Members may have noticed in recent years an increasing number of power fluctuations and power disruptions at the Country Club. The electrical installations were thoroughly checked by expert consultants, and it was discovered that significant sections of the existing electrical bus ducts were corroded and needed to be replaced. As such, a plan was devised to replace these existing bus ducts with much more durable armored electrical cables. This replacement work took place over the summer months (July – September 2017).

Hot Water Boiler Replacement WorksA year ago after concerns were raised about the existing electric hot water boilers, a comprehensive study was undertaken to determine how best to reliably provide domestic hot water for our kitchen operations and showers, as well as how best to heat the swimming pool water during the cooler late Fall and early Spring months. After long meetings with

Chair : James RobinsonVice Chair : Matthew CreedonCommittee Members : Abbi DeLessio Douglas Wu Jack Lange Jason Evans Kevin Tranbarger Pat Hall Rick Johannessen Sarah Merrill Mowat Yash Rana

ChairJames Robinson



the appointed consultants, it was decided to install a series of gas-fired hot water boilers that could serve all of the Club’s hot and warm water needs. As a result, the existing electric hot water boilers and existing swimming pool heat pumps will be de commissioned and replaced with a series of Town Gas hot water boilers where the existing carpenter's workshop area is located. These works will be carried out at the same time as the proposed Adult Pool Deck Bar and Plunge Pool extension works and should be completed by June – July 2018.

Country Club: Master Plan Phase 1 Projects

In December 2016, the Board and Development Committee approved moving forward with four projects under Phase 1 of the Country Club's Master Plan; the addition of golf simulators in one of the existing squash courts (target completion by March 2018); an expansion of the existing Adult Pool Deck to add a plunge pool at one end and a signature bar at the other (target completion by June 2018); a refurbishment of Crash, Chill & Joe's (target completion by November 2018); and finally, a renovation of The Fireside lounge and restaurant/bar area (target completion by November 2018).

This year, the Committee has been involved with appointing the locally-based consultants for these projects including regulatory submissions to the Buildings Department. The Club will continue to use U.S.-based specialist club designers Chambers for the design of these four areas at our Tai Tam facility. The design works have progressed quite smoothly to date, and special thanks go out to those members of the Board and Development Committee that have had to join in the regular 7:00am design development conference calls with Chambers, with the saving grace being the wonderful huevos rancheros and steaming hot coffee that the Club’s staff serve at the Town Club in the early hours of the morning!

In addition, when the Board approved Phase 1 of the Country Club's Master Plan, they also approved our pursuing the “clawback” of approximately 1,300m2 of unused Gross Floor Area (GFA) which could be used for the Country Club's future expansion plans. A comprehensive Buildings Department submission was made earlier this year and we have been successful with our application for consolidating and confirming this unused GFA, without the need at this time to purchase additional GFA from Lands Department.In concluding, I would like to sincerely thank all the Development Committee Members for their


considerable time and advice that they have given to myself and the Club, including Vice Chair Matt Creedon, Abbi DeLessio, Douglas Wu, Jason Evans, Pat Hall, Kevin Tranbarger, Rick Johannessen, Sarah Merrill Mowat, Jack Lange and Yash Rana. I look forward to working closely with the Committee throughout the remainder of the year and continuing into 2018 to accomplish these challenging Phase 1 projects at the Country Club.


Social Committee Report

The Social Committee had five goals and objectives to achieve this year, and they primarily focused on two important priorities; i) To help plan and implement major Club Events, and ii) To review and recommend, which charities the Club would support, mainly in the form of donated memberships for fundraising purposes, but more importantly, to create volunteer programs with these charity partners to initiate an enhanced engagement with our membership.

Club Events

The overall focus of the Social Committee is to assist in devising and implementing a wide range of fantastic events for Members, their family and friends to enjoy. This year, the Social Committee has worked hard once again to conceive and deliver an array of fun and well attended Club events that appeal to all ages.

Committee Members are always encouraged to attend as many Club events as possible so they are able to give important feedback to the Committee, including what has worked well and what did not work as well. At the beginning of the year, each Social Committee Member receives a draft of the Club events calendar for the year and is also asked to bring forward any ideas of new club events they would like to see or old events they would like to revamp and/or see more of.

Here are just some of the main Club events which took place this year:

• ThanksgivingDinner• ChristmasTreeLighting• BrunchwithSanta• ChristmasDayBrunch• NewYear’sEveFireworks• NewYear’sDayBrunch• ChineseNewYearFireworksDinner• LionDanceLunchBuffet• SuperBowlBreakfast• Valentine’sDinner• AcademyAwardsBreakfast• Father&DaughterDinnerDance• USEaglesRugbyBreakfast• EasterBrunch• Mother’sDayBrunch• BollywoodTweensBash• Father’sDayBrunch• MemorialDayPoolParty• IndependenceDayPicnic• 20th Anniversary HKSAR Establishment Day Fireworks • WelcomeBackPoolParty

In addition, a number of one-off special events took place which proved extremely popular with Members.

• TexasBBQwithGuestChefJayMcCarthyGreat food and great feedback from Members! This event was such a hit with Members that we’d like to have two Club event BBQs on the South Lawn at the Country Club each year.

Chair : Rick JohannessenVice Chair : Shih-Wei Peng (resigned on June 20, 2017)

Kevin Tranbarger (appointed on August 28, 2017)

Committee Members : Alice Schwartz Arthur Berman David Bonnet Gail McDermott (resigned on January 23, 2017) Jolene Han Johnson Katherine Creedon Kimberly Brandt Manoj Arora Marcy La Ront (resigned on May 8, 2017) Timothy Chen (appointed on May 29, 2017)

ChairRick Johannessen



• DinnerwithAdventurerAdrianHayesWe were fortunate to secure an evening with British record-breaking polar explorer, mountain climber, keynote speaker, business coach, author and campaigner, Adrian Hayes during his visit to Hong Kong. This was a rather unique type of family orientated Club event and those who attended, both young and old were suitably impressed by the stories that this motivational speaker told about his incredible life.

• TownClubWine&ArtFairThe Club identified over 119 pieces of memorabilia and asked the Committee to recommend a way to offer these to the Members. A Wine Fair at the Town Club was already being planned so the decision was made to combine both events. The memorabilia consisted of U.S. Navy plaques which had been given to the Club during port visits to Hong Kong and a number of paintings. The evening was a huge success resulting in not only $100K in wine sales but also raising almost $20K from the sales of 11 U.S. Navy plaques and 28 pieces of artwork. The funds raised from the plaques will be donated to the U.S. Navy Memorial Fund which supports the families of service personnel and the remaining artwork sales will be divided up evenly between the four charities the Club is sponsoring this year.

Charitable Giving

The American Club of Hong Kong has been a proud member of the Hong Kong community for nearly a century. Strongly rooted in our values is a commitment to give back to this vibrant and dynamic community we call home. The Social Committee was tasked with selecting which charities the Club should support for the coming year. The selection process involved meeting representatives from a number of different charitable organizations to better understand their work and how they could potentially benefit from the Club’s support. This support from the Club is primarily in the form of a donated One Year Temporary Membership which ideally is auctioned off to raise money for its work. The Club looks to support charities that are Hong Kong based organizations which deliver local programs that support positive initiatives in the following four areas: children, elderly, environment and minorities.

Most members that we have spoken to had no idea that the American Club does anything of a charitable

nature. Though this has not been core to the Club historically, the Committee sees this as an area that need to be fostered and better developed in the hopes of increased engagement throughout our membership and hopefully a sense of pride that the Club cares about giving back. We are looking at ways of developing specific programs with our Charity partners that begin with better communication and education of who they are and how we can better support these partners as a community. Our hope is that we can create programs that improve volunteerism for Members and their families.

The committee advocates consistent coverage of our partners in the American Club magazine, potential more casual Meet & Great style forums and more structured informational talks for Members.

The four charities selected for American Club support in FY17/18 are:

i. MissionPossible: (www.missionpossible.org.hk) Their mission is to build awareness of poverty issues and to encourage philanthropy and social responsibility within Hong Kong - in effect, tackling issues surrounding: children, youth, elderly and food availability.

ii. BringMeaBook:(www.bringmeabook.org.hk) They envision a Hong Kong in which every child is read to, strengthening family and community bonds, and creating a love of learning. Bring Me a Book is happy to help with a book drive to upgrade our Eagle’s Nest Book Case.

iii. HandsOnHongKong:(www.handsonhongkong.org) Their mission is to mobilize and empower the community to meet pressing social needs in Hong Kong through volunteer services. HOHK is happy to organize a bespoke event for volunteerism with American Club members to be held at the American Club.

iv. KELYSupportGroup: (www.kely.org) Their mission is to empower young people through non-judgmental peer support to make informed choices in reaching their potential. KELY Support Group would be very happy to hold a work shop(s) or talk(s) about drug and alcohol issues as they pertain to youth in Hong Kong today.

The Committee found that all four of the Charities create and deliver real change in their programs and are proud to support them for the coming year. Please


http://www.missionpossible.org.hk/

http://www.bringmeabook.org.hk/

http://www.handsonhongkong.org/

http://www.kely.org/



do look out for increased exposure about our charitable partners and their programs in the upcoming issues of the Club Magazine. We hope to see more of you volunteering for their programs in the future.

Partnership with USA Rugby

The Social Committee is proud to have been integrally involved with helping to formalize and further strengthen the Club's partnership with USA Rugby for the upcoming year. The Club has historically been a strong supporter of Team USA in every Hong Kong Rugby Sevens cycle by annually hosting a breakfast in the Vista Ballroom (usually held on the Thursday morning right before the start of the HK7s) that has been a widely popular event for our Members to meet the players in a casual format. The Club has also provided a platform to the USA Trust who's mission is to help support the team both operationally and financially. The Club has now confirmed an official partnership with USA Rugby and USA Trust and their annual Hong Kong fundraising dinner will now officially be a club-sponsored event. We also hope to try and the Thursday morning breakfast function as well to appeal to a wider audience on a hopefully more convenient time. More on that to come, but, to kick things off, the Club will proudly start offering USA Rugby merchandise for sale in the Country Store so be sure to look out for these new products which will help support the boys in their mission to keep stepping up in the lead up to next summer's World Cup in San Francisco.

Last but certainly not least, I would like to thank the entire American Club Management Team and Staff who work hard to make each event as special and as successful as possible. I would also like to thank all the Members of this year’s Social Committee for selflessly offering their expertise and for their ongoing contribution. The next time you, your family and guests are enjoying one of our great Club events, be sure to thank them. Or better yet, please volunteer to join the Social Committee yourself!


Fitness and Recreation Committee Report

The Fitness and Recreation Committee had a number of goals and objectives this year including increasing participation in adult, youth and children’s recreational programs; reviewing the swim, tennis, squash programs and Golf Society; improving the Member experience of Elements Spa and increasing revenue opportunities; and strengthening the Club’s relationships with community youth sports groups. These were in addition to inputting into the renovation of the fitness center at the Town Club and the replacement of equipment in the fitness center at the Country Club.

Fitness

As most Members were aware, the Town Club E2 Fitness Center renovation began on Monday, July 3, 2017 and lasted for two months. The plans were printed in the Club magazine and were displayed on banners outside the gym for a number of months before the renovation. All floor surfaces were changed throughout, the reception desk was relocated to the ramp area, the entrance doors were relocated close to the lifts and the floors were raised to create one level in the ladies locker room area. In addition, the ladies locker room entrance was relocated near the stretching area and before the men’s locker room entrance. The men’s locker room area was divided into a wet and dry area. There was a total remit of the steam and sauna equipment. A full time receptionist will allow the Personal Trainers to spend more time training. In addition, once the fitness center opened, we no longer charge a fee for a workout kit in the gym.

At the Country Club, most of the fitness center equipment will be replaced. Currently the machines and equipment are almost ten years old, the models are outdated and cost of maintenance is continuing to increase. The Committee Members were invited to visit the show rooms of different vendors to see or test the latest installations of the proposed equipment. In addition new pieces of equipment were placed in the gym for Members to try out. The Committee also reviewed usage reports from individual machines to guide their decisions.

Tennis

The Club’s current contract with PBI expired in June 2017 and in advance of a tender process the Tennis Sub-Committee oversaw the distribution of a survey to interested tennis members on what they wanted so we could better serve the Club’s tennis playing community. In addition, the Tennis Sub-Committee looked at how to best balance the courts between leagues, lessons, tournaments and social play. In June, the Board approved for PBI to continue to run the Club’s tennis program for the next three years with a new contract which highlights a number of new areas for improvement including the Junior Team, Tennis Socials, the roles of the Tennis Director and the timing of lessons. Furthermore, the Club created Key Performance Indicators (KPIs) for the tennis program, with input from the Tennis Sub-Committee, which will be reviewed twice a year.

Chair : Bruce VonCannon Vice Chair : Patrick KayeCommittee Members : Bob Haskins Ed Gildar Eliza Lewis Jennifer Kozel Nicholas Lock Ryan Sudol Sharon Leung Yvonne Remy-Yee

ChairBruce VonCannon


Golf

The Club’s Golf Society continues to thrive with over 600 Members and there were many events on the golf calendar this year. Members of the Golf Society plan these events and participate as captains. This year, the Golf Society also conducted a survey to find out what Members would like to have at the Club. Their overwhelming response was to have a golf simulator on site. This is now one of the projects under Phase 1 of the Country Club Master Plan and will be located where one of the squash courts currently is. In addition to leisure use from golfing Members, it will also serve for the development of a junior program and private lessons. Another important addition to the golf program this year was the installation of two golf cages at the Multi-purpose Court along with new mats, targets, balls and buckets. Usage has been very good and feedback from Members has been positive.

Squash

The Club has a small but very motivated group of squash players who are keen to increase participation. They continue to host monthly themed squash socials and this year held an event with David Mayfield, the Cornell University Squash Coach who was in Hong Kong. Games fall on Thursdays and the players enjoy social dinner in The Fireside after each home match! The Saturday morning open matches have also become quite popular for players to drop by and participate in games.

Elements Spa

The Spa suffered at the beginning of the year from being short of two therapists which are, of course, revenue generating positions. By the spring, however, both positions had been filled, one by a therapist who can perform multiple modalities including massage, nails, waxing and facials, and the other by a therapist specializing in sports and rehabilitation massage with a background of physiotherapy. And as of August 1, the Spa was running with a full team. Spa users are now coming for preventative maintenance, sports rehabilitation and wellness and the Club is looking to have a specific package for golfers. The spa menu will be re-vamped and we have currently confirmed a partnership with a new product line, ila, out of the Coswolds in the U.K. Spa parties for tween and teenage girls continue to be popular and certainly help to generate revenue during slow times in the Spa.

Swimming

The F&R Committee also took the opportunity this year to review the Club’s Swim Program, operated by Stingrays. Part of this involved the distribution of a survey to those parents with children in the swim program. As last year was our first year working with Stingrays there were some “teething” issues at first and this year went much smoother. Stingrays have been very flexible and accommodating by offering additional classes, different schedules and private classes. Stingrays have introduced an online, interactive status report for parents to communicate progression, challenges and accomplishments. There will also be increased opportunities for inter club participation in swim meets and advanced trainings.

Programs & Recreation

For ChildrenThe 2017 spring registrations trended positively and were ahead of the two previous terms. This was partly as a result of the Club working with new vendors and adding some new classes such as Basketball Academy, and new workshops including App Jamming and DJ Workshops. In addition a review of prices was conducted to ensure consistency within the market and value to Members to promote and encourage sign-ups. Registration in summer programs including Sports Camps, Art Camps, and Science Camps is trending faster than last year. This year, our Campfire Sleepovers season was also the busiest yet and additional dates were added due to popular demand. We’ve had a very positive response from families who wait all year to camp out on the South Lawn!

For AdultsIn contrast to children’s classes, participation in adult classes is trending slower. After a variety of feedback, we adjusted schedules to include early morning classes (pre-work) and evening classes (post work) on each weekday as well as weekend classes.

Eagle’s Nest The Eagle’s Nest continues to do well with high participation in activities. Some new retail lines have been placed there and we are continuing to work with suppliers to sponsor new and interesting things in our kids’ areas. The new Camp Swoop format was a huge success and we were maxed out for our holiday camps. Laser Tag continues to be so popular that we are considering purchasing our own in-house equipment



so we do not have to depend on vendors and can generate additional revenue.

Race Box The Club’s private race box at Happy Valley race track continues to present a challenge with some months being fully booked and other months being near empty. This year we have tried running seasonal promotions and piggy-backing off some of Happy Valley’s own promotions. We have also targeted corporate businesses to use the race box as event space or for a company outing. It really is a great evening out and if you have not yet booked it you are certainly encouraged to do so.

Rock Climbing WallThe rock climbing wall at the Country Club can be used for birthday parties, group lessons, private lessons and team building. We are currently looking to make some improvements including replacing the ropes, purchasing additional helmets and harnesses and replacing those that are damaged.

F&R is a large and important responsibility that adds a great deal to the Member experience at The American Club. I would like to thank all of the Committee Members who have donated their time and energy every month to ensure the Club’s Fitness and Recreation Programs meet the needs of the Members. In addition, a special word of thanks goes to the Club’s Management and Staff who dedicate themselves to offering American Club Members a fantastic range of programs, activities and classes for every age and ability level and who work hard to keep our fitness and recreation facilities in such great condition for our Members to enjoy on a daily basis.



Fiscal year 2016/17 was another very busy year for the Club’s F&B operation and the first full financial year without any outlet closures following the completion of Town Club renovations. Total F&B revenue was $105.5 million, with total covers and average check in the Town Club slightly better than the budget but total covers and average check in the Country Club falling slightly short. Member Satisfaction scores in all F&B outlets are above the target score of 75, especially in Fireside and McKay’s, which consistently score over 90.

Key to the success of F&B operations in both Clubhouses this year has been private event bookings in The Clipper at the Town Club (mainly corporate breakfast, evening cocktail and dinner events) and in the Vista Ballroom at the Country Club (mainly weddings and family events). This year, revenue from private event represents 25% of total F&B revenue, up from 16% last year. We hope to capitalize on this success with the appointment of Eve Sze as our new Event Sales Manager. Eve has a diverse background in event/conference sales, as well as weddings, having

Food and Beverage Committee Report

Revenuesin millions

Costsin millions

GOPin millions

Coversin thousands

Average Revenueper cover

2014-2015 2015-2016 2016-2017

$(14)$(13)

$81$89

$94$103

365 374

$222 $237

$106 $110

$(4)

412

$256

Chair : Patrick KayeVice Chair : Peter Kaminsky Committee Members : Alice Wong Brian Norman David Lamb Jessica Grady Katherine Fong Lin Shi Moka Quinlan Zoelynne Sursock

ChairPatrick Kaye

F&B Financial Performance

$120

$100

$80

$60

$40

$20

$0

($20)


worked at a number of five star hotels as well as a well-known restaurant group.

Another success story this year has been the Country Store, which has enjoyed exceptionally strong wine sales, helped by an increase in the number of wine dinners and an additional wine fair held at the Town Club. Our focus will now shift to the food offerings at the Country Store, which still have room to grow.

In terms of costs, the F&B Managers have done a great job this year in managing the operation’s largest expense, payroll, by controlling the use of casual labor and sharing staff between the two Clubhouses. In order to apply the objective of ‘One Club; Two Locations’, F&B staff are no longer referred to as Town Club staff or Country Club staff but instead as American Club staff. The Club continues to face challenges in recruitment, which we hope can be helped by new partnerships with the Vocational Training Council and Hong Kong Polytechnic University. In addition, a major priority in FY2017/18 budget is the implementation of a 5-day work week for F&B employees. Although this will require additional investment, we believe that the change will result in better retention and increased staff morale. As an additional benefit to staff members, meal service in the Country Club staff canteen will now be prepared by the in-house culinary team under the supervision of the Executive Chef.

Town Club

One of the initiatives at the Town Club this year was to open the 48th floor on Sundays, The Clipper for lunch and McKay’s for dinner. The results have been mixed after offering various incentives and menu choices to attract more patronage. The Clipper will continue to offer Sunday lunch (new themes are currently being discussed), but as of July 1, McKay’s will close on Sundays.

Improvements to The Clipper continue to be successful, both in the “hardware” (the dining room was “softened” with the addition of pictures, etc.) and “software” (with lighter and healthier menu items, new staff uniforms and linen).

Country Club

At the Country Club, we continue to face the challenge of having slow business from Mondays to Thursdays and very high utilization on weekends. In order to increase F&B usage during the week, a number of different a la carte promotions have been introduced this year, including Tandoori Tuesdays and Baby Back Thursdays, in addition to the already popular Prime Rib Wednesdays.Another new initiative at the Country Club is a glass

recycling program undertaken with ‘Green Glass Green’, started by The Hong Kong Dumper Truck Drivers Association and funded by the Hong Kong Government’s Environment and Conservation Fund. 800 – 1,400 kilograms of glass is collected monthly and transformed to glass sand to produce building blocks.

Wine Lovers’ Society

The WLS aims to build a community of Members who love wine and to give them opportunities to explore wine and spirits in a fun and social setting. Under the leadership of F&B Committee Member, Alice Wong, the WLS has had an extremely successful year, organizing wine dinners almost once a month and offering monthly wine tastings as great socializing and networking events. Next on their agenda is an education class with a winemaker who turned into a wine educator, along with other theme-based events from small scale-wine dinners held in the private dining rooms to large-scale wine fairs held in The Clipper or Vista Ballroom.

Country Club Executive Chef Matt Gilbert

Executive Chef Matt Gilbert has departed the American Club at the end of August to return with his family to his native Montana. I hope that you will join me in thanking Chef Matt for his exemplary service to the Club since he joined us in 2012. Chef Matt has led a dedicated and tightly-knit brigade in the kitchen in Tai Tam. Under Matt’s leadership, our Members and Guests have enjoyed a consistently high quality dining experience, with diverse menus, excellent ingredients, memorable events, and a commitment to satisfying the many special requests that we make. We wish Chef Matt the best.

Thanks

I would like to extend my thanks to all of our loyal Club F&B staff, who work tirelessly both in the kitchen and in the front-of-house to care for the Members of the Club. In addition, I would like to thank our F&B Committee Members this year, who have each contributed their time to help make our Member dining experience all that it can be, including Peter Kaminsky, Alice Wong, Brian Norman, David Lamb, Jessica Grady, Katherine Fong, Lin Shi, Moka Quinlan and Zoelynne Sursock.

Finally, we welcome the continuing feedback of all of our Members, and we encourage you to share your thoughts about F&B at the American Club by way of written comment, or by speaking directly to Staff, Management, or Members of the F&B Committee. Thank you for your continued patronage and support for the F&B Program at the American Club!

Food and Beverage Committee Report


Governors’ Report

The Governors submit their report together with the audited financial statements of The American Club (the “Club”) for the year ended 30 June 2017.

Principal activities

The principal activities of the Club are the provision of dining, fitness and other recreational facilities and activities for its members.

Results

The results of the Club for the year are set out in the statement of income and expenditure and other comprehensive income on page 29.

Donations

Charitable and other donations made by the Club during the year amounted to HK$100,000 (2016: HK$100,000).

Board of Governors

The Governors of the Club during the year and up to the date of this report are:

Yash A. RanaGail B. McDermott (resigned on 23 January 2017)Anthony G. BarnesRobert B. ChipmanMatthew R. CreedonPatrick J. KayeSarah C. Merrill MowatShih-Wei Peng (resigned on 20 June 2017)James A. RobinsonKevin C. Tranbarger (resigned on 1 January 2017 and reappointed on 1 May 2017)Bruce D. VonCannonCharles G. Wellins (resigned on 1 January 2017)Jason V. Bajaj (appointed on 1 January 2017)Richard J. Johannessen III (appointed on 1 January 2017)Peter R. Kaminsky (appointed on 1 January 2017)

In accordance with Article 10.1 of the Club’s Articles of Association, a new Board of Governors will be elected at the forthcoming Annual General Meeting.

It is confirmed that none of the Governors’ resignations are related to the affairs of the Club that need to be brought to the attention of the members of the Club.

Governors’ material interests in transactions, arrangements and contracts that are significant in relation to the Club’s business

No transactions, arrangements and contracts of significance in relation to the Club’s business to which the Club was a party and in which a Governor of the Club had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

Governors’ interests in the shares and debentures of the Club or any specified undertaking of the Club

At no time during the year was the Club a party to any arrangement to enable the Governors of the Club to hold any interests in the shares or debentures of the Club or its other associated corporation.


Management contracts

No contracts concerning the management and administration of the whole or any substantial part of the business of the Club were entered into or existed during the year.

Business review

Review of the Club’s business

During the year under review, the Club’s total revenue was HK$277.0 million (2016: HK$246.2 million) with an overall operating surplus of approximately HK$7.8 million (2016: HK$5.3 million in deficit) due to Management’s continued focus on improving operational efficiencies. Member usage of both clubhouses, particularly the Town Club on weekdays and the Country Club at weekends, has been extremely high. The Board has spent considerable time this year on two major development projects, namely the renovation of the Town Club fitness center and planning how to implement the projects under Phase 1 of the Country Club Master Plan. The Club’s financial key performance indicators are revenue and number of members.

Principal risks and uncertainties facing the Club

The principal risks and uncertainties facing the Club are mainly financial and fund risk. The Board of Governors has assigned the Club’s Finance Committee to provide oversight and guidance to manage the Club’s financial and fund risk.

Financial risk factors

The Club’s activities expose it to a variety of financial risk factors including foreign exchange risk, price risk, credit risk, liquidity risk and cash flow interest rate risk. The Club’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Club’s financial performance.

• Foreignexchangerisk

Foreign exchange risk arises when future commercial transactions, and recognised assets and liabilities are denominated in a currency that is not the Club’s functional currency. The Club is exposed to foreign exchange risk primarily with respect to United States dollars since the Club has significant financial assets in equity and fixed income markets, which are denominated in United States dollars. The Club currently does not have any foreign currency hedging policy.

However, United States dollars are reasonably stable under the Link Exchange Rate System, the Governors are of the opinion that the Club does not have significant foreign exchange risk. Accordingly, no sensitivity analysis is performed.

• Pricerisk

The Club is exposed to equity and fixed income securities price risk because investments held by the Club are classified as financial assets at fair value through profit or loss in the statement of financial position. The Club’s Finance Committee is responsible to monitor the investment fund manager’s performance and the price risk arising from investments in equity and fixed income securities. In additions, the investment fund manager diversified its investment portfolio in accordance with the investment policy, strategies and limits set by the Club.

• Creditrisk

Credit risk arises from financial assets at fair value through profit or loss, entrance fee receivables, accounts receivable from members, other receivables and cash and deposits at banks.

The Club has significant financial assets in equity and fixed income investments, and the fair value of these financial assets are highly dependent on market conditions. The Finance Committee regularly monitors the investment portfolio managed by the investment fund manager.

Governors’ Report


Governors’ Report

Business review (Continued)

Principal risks and uncertainties facing the Club (Continued)

Financial risk factors (Continued)

• Creditrisk(Continued)

The Club has policies in place to control and monitor the creditability of the counterparties. The Club will write off directly or make provision for those receivables which are considered as irrecoverable. In this regard, the Governors are of the opinion that the Club’s exposure to such credit risk is prudently managed.

The credit risk of liquid funds and investments is limited because the counterparties are financial institutions with high credit ratings assigned by international credit-rating agencies.

The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position.

• Liquidityrisk

Prudent liquidity risk management implies maintaining sufficient cash and short term bank deposits. Due to the nature of its underlying operations, the Board of Governors has designated HK$80 million (2016: HK$80 million) out of fixed deposits and financial assets at fair value through profit or loss as restricted reserve funds for maintaining the long term financial stability of the Club.

• Cashflowinterestraterisk

Other than cash at banks and fixed deposits which are interest bearing at prevailing market rates, the Club has no other interest bearing assets and liabilities. The Club’s income and operating cash flows are generally independent of changes in market interest rates. Accordingly, the Governors are of the opinion that the Club does not have significant cash flow interest rate risk.

Fund risk management

The Club’s objectives when managing funds are to safeguard the Club’s ability to continue as a going concern, by procuring adequate financial resources from its members and by adjusting the level of its investments. The Club’s overall strategy remains unchanged from prior year.

Operational risk management

The Club outsourced the facilities division to a global service provider that also manages many other clubs and buildings in Hong Kong. The Club has already seen a marked improvement in maintenance while maintaining steady costs incurred. There have been no non-compliance of law and regulations and no environmental issues that might have a significant impact on the Club. The Club has built good relationships with its employees, members and suppliers and therefore, the operational risks and uncertainties faced by the Club are minimal.

Particulars of important events affecting the Club that have occurred since the end of the financial year

There were no important events since the end of the financial year that have been identified in the business review.

Indication of likely future development of the Club’s business

The Club plans to continue its commitment to being a premier club in Hong Kong which provides a gathering place for social, recreational, and business activities for members and their families in a distinctive American atmosphere. The Club’s business is expected to be stable in the coming financial year with an operating budget that is breakeven and with focus on the development and implementation of the Country Club Master Plan.


Business review (Continued)

Principal risks and uncertainties facing the Club (Continued)

Operational risk management (Continued)

Further discussion and analysis of the Club’s activities as required by Schedule 5 to the Hong Kong Companies Ordinance can be found in the Committee’s report set out on pages 3 to 21 of this Annual Report. This discussion forms part of the Governors’ Report.

Permitted indemnity provisions

Pursuant to Article 14.5 of the Club’s Article of Association, during the financial year and up to the date of this Governors’ Report, each member of the Board of Governors, shall be indemnified by the Club against and it shall be the duty of the Board of Governors out of the funds of the Club to pay all costs, losses and expenses which any such Governor become liable to by reason of any contract entered into, or act or deed done by him as such Governor in the proper or reasonable discharge of his duties, provided that none of the assets of the Club shall be applied either directly or indirectly in payment of the whole or part of an fine or penalty imposed upon any person by sentence or order of the court.

Auditors

KPMG were first appointed as auditors of the Club in 2017 upon the retirement of PricewaterhouseCoopers.

KPMG retire and, being eligible, offer themselves for re-appointment. A resolution for the re-appointment of KPMG as auditors of the Club is to be proposed at the forthcoming Annual General Meeting.

By order of the Board

Robert B. ChipmanPresidentHong Kong, 25 September 2017

Governors’ Report


Independent Auditor’s Report to the Members of The American Club(Incorporated in Hong Kong and limited by guarantee)

Opinion

We have audited the financial statements of The American Club (“the Club”) set out on pages 28 to 54, which comprise the statement of financial position as at 30 June 2017, the statement of income and expenditure and other comprehensive income, the statement of changes in funds and the statement of cash flows for the year then ended and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the financial statements give a true and fair view of the financial position of the Club as at 30 June 2017 and of its financial performance and its cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and have been properly prepared in compliance with the Hong Kong Companies Ordinance.

Basis for opinion

We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Club in accordance with the HKICPA’s Code of Ethics for Professional Accountants (“the Code”) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Information other than the financial statements and auditor’s report thereon

The Governors are responsible for the other information. The other information comprises all the information included in the annual report, other than the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Governors for the financial statements

The Governors are responsible for the preparation of the financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance and for such internal control as the Governors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Governors are responsible for assessing the Club’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Governors either intend to liquidate the Club or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. This report is made solely to you, as a body, in accordance with section 405 of the Hong Kong Companies Ordinance, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.


Auditor’s responsibilities for the audit of the financial statements (Continued)

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

• Identifyandassesstherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control.

• Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Club’s internal control.

• Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesand related disclosures made by the Governors.

• ConcludeontheappropriatenessoftheGovernors’useofthegoingconcernbasisofaccountingand,basedon the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Club’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Club to cease to continue as a going concern.

• Evaluatetheoverallpresentation,structureandcontentofthefinancialstatements,includingthedisclosures,and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the Governors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

KPMGCertified Public Accountants8th Floor, Prince’s Building10 Chater RoadCentral, Hong Kong

25 September 2017

Independent Auditor’s Report to the Members of The American Club


Statement of Financial Position at 30 June 2017(All amounts in Hong Kong dollars unless otherwise stated)

Note 2017 2016Non-current assetsProperty, plant and equipment 5 283,421,278 317,207,999Financial assets at fair value through profit or loss 7 479,281,871 463,558,774Intangible assets - golf club memberships 8 5,400,000 5,400,000Rental deposits, non-current 11 796,975 210,000 768,900,124 786,376,773

Current assetsInventories 4,613,052 4,562,397Entrance fee receivables 9 5,087,500 -Accounts receivable from members 10 17,708,151 16,782,962Deposits, prepayments and other receivables 11 24,346,712 12,279,618Bank deposits with original maturities over three months 12 71,939,857 -Cash and cash equivalents 12 83,640,731 129,132,466

207,336,003 162,757,443

Current liabilitiesProvision for reinstatement of the Club’s leased office premises 13 - 1,076,900Accounts payable and accrued charges 13 32,540,864 52,478,886Deferred revenue 3,087,800 2,778,000Receipts in advance from members 9,066,710 9,185,940 44,695,374 65,519,726

Net current assets 162,640,629 97,237,717

Total assets less current liabilities 931,540,753 883,614,490

Non-current liabilityProvision for reinstatement of the Club’s leased office premises 13 654,740 -

Net assets 930,886,013 883,614,490

FUNDS Membership debentures 14 611,729,000 611,729,000Debenture premiums 14 18,660,000 18,660,000Capital and development fund (60,031,330) (85,704,927)Building fund 225,632,163 271,164,898Accumulated fund 134,896,180 67,765,519

Total funds 930,886,013 883,614,490

Approved and authorised for issue by the Board of Governors on 25 September 2017

_____________________________ _____________________________ Robert B. Chipman Matthew R. CreedonPresident Treasurer

The notes on pages 32 to 54 are an integral part of these financial statements.


Note 2017 2016

Revenue 15 276,983,006 246,236,868

Operating income 15 245,718,931 220,620,632Cost of sales 16 (62,170,889) (52,433,493)Employee benefit expense 17 (110,955,420) (109,567,939)Operating expenses 19 (61,524,641) (60,564,087)Central office rental (3,289,708) (3,346,152)

Operating surplus/(deficit) 7,778,273 (5,291,039)Operating depreciation 5 (24,973,345) (22,611,414)Loss on disposal of property, plant and equipment 22(b) (444,036) (4,415,871)

(17,639,108) (32,318,324)

Additional membership incomeEntrance fees - term memberships 4,794,000 4,824,000Transfer fees 23,150,000 16,855,000Debenture renomination fees 4,260,000 4,530,000 15 32,204,000 26,209,000

Surplus/(deficit) before capital depreciation and investment gains, net 14,564,892 (6,109,324)Capital depreciation 5 (23,231,143) (21,473,302)

Deficit after capital depreciation but before investment gains, net (8,666,251) (27,582,626)Investment gains, net 20 15,398,374 22,683,358

Surplus/(deficit) for the year 6,732,123 (4,899,268)Other comprehensive income for the year - -

Total comprehensive income/(loss) for the year 6,732,123 (4,899,268)


Statement of Income and Expenditure and other Comprehensive Income for the year ended 30 June 2017(All amounts in Hong Kong dollars unless otherwise stated)


Capital and Membership Debenture development Building Accumulated debentures premiums fund fund fund Total (notes 2.12 (notes 2.12 and 14) and 14) (notes 2.13) (notes 2.14)

Balance at 1 July 2015 611,729,000 18,660,000 6,688,284 197,770,023 44,194,651 879,041,958

Total comprehensive lossDeficit for the year - - - - (4,899,268) (4,899,268)Other comprehensive income - - - - - -

- - - - (4,899,268) (4,899,268)

Transactions with membersEntrance fees from permanent memberships - - 9,471,800 - - 9,471,800Transfers between funds - - (101,865,011) 73,394,875 28,470,136 -

- - (92,393,211) 73,394,875 28,470,136 9,471,800Balances at 30 June 2016 and 1 July 2016 611,729,000 18,660,000 (85,704,927) 271,164,898 67,765,519 883,614,490

Total comprehensive incomeSurplus for the year - - - - 6,732,123 6,732,123Other comprehensive income - - - - - -

- - - - 6,732,123 6,732,123

Transactions with membersEntrance fees from permanent memberships - - 40,539,400 - - 40,539,400Transfers between funds - - (14,865,803) (45,532,735) 60,398,538 -

- - 25,673,597 (45,532,735) 60,398,538 40,539,400Balance at 30 June 2017 611,729,000 18,660,000 (60,031,330) 225,632,163 134,896,180 930,886,013


Statement of Changes in Fundsfor the year ended 30 June 2017(All amounts in Hong Kong dollars unless otherwise stated)


Note 2017 2016

Cash flows from operating activitiesCash (used in)/generated from operations 22(a) (132,419) 42,576,835Interest received from bank deposits 569,394 650,738

Net cash generated from operating activities 436,975 43,227,573

Cash flows from investing activitiesPurchases of property, plant and equipment (14,532,253) (101,865,011)Proceeds from disposal of property, plant and equipment 22(b) 4,000 73,000(Increase)/decrease in bank deposits with original maturities over three months (71,939,857) 46,384,570

Net cash used in investing activities (86,468,110) (55,407,441)

Cash flows from financing activitiesProceeds from entrance fees of permanent members 40,539,400 18,346,800

Net cash generated from financing activities 40,539,400 18,346,800

Net (decrease)/increase in cash and cash equivalents (45,491,735) 6,166,932Cash and cash equivalents at the beginning of the year 129,132,466 122,965,534

Cash and cash equivalents at the end of the year 12 83,640,731 129,132,466


Statement of Cash Flowsfor the year ended 30 June 2017 (All amounts in Hong Kong dollars unless otherwise stated)


1 Legal status

The American Club (the “Club”) is engaged in the provision of dining, fitness and other recreational facilities and activities for its members.

The Club is a club incorporated under the Hong Kong Companies Ordinance and is limited by guarantee. The address of its registered office is 48/F-49/F, Two Exchange Square, 8 Connaught Place, Central, Hong Kong.

Under the provisions of the Club’s Articles of Association, every member shall, in the event of the Club being wound up, contribute to the assets of the Club an amount not exceeding HK$100 (2016: HK$100). At 30 June 2017, the Club had 2,963 (2016: 2,973) members.

These financial statements are presented in Hong Kong dollars, unless otherwise stated.

2 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

The financial statements of the Club have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRS”). which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), accounting principles generally accepted in Hong Kong and the requirements of the Hong Kong Companies Ordinance.

The HKICPA has issued certain new and revised HKFRSs that are first effective or available for early adoption for the current accounting period of the Club. Note 2.1(a) provides information on any changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the Club for the current and prior accounting periods reflected in these financial statements.

The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets at fair value through profit or loss, which are carried at fair value (see note 2.6).

The preparation of financial statements in conformity with HKFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Club’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 4.

(a) Changes in accounting policies

The HKICPA has issued a number of amendments to HKFRSs that are first effective for the current accounting period of the Club. None of these developments have had a material effect on how the Club’s results and financial position for the current or prior periods have been prepared or presented.

The Club has not applied any new standard or interpretation that is not yet effective for the current accounting period.

Notes to the Financial Statements (All amounts in Hong Kong dollars unless otherwise stated)



2 Summary of significant accounting policies (Continued)

2.1 Basis of preparation (Continued)

(b) Possible impact of amendments, new standards and interpretations issued but not yet effective for the year ended 30 June 2017

Up to the date of issue of these financial statements, the HKICPA has issued a number of amendments and new standards which are not yet effective for the year ended 30 June 2017 and which have not been adopted in these financial statements. These include the following which may be relevant to the Club.

Effective for accounting periods beginning on or after

Amendments to HKAS 7, Statement of cash flows: Disclosure initiative 1 July 2017

HKFRS 9, Financial instruments 1 July 2018

HKFRS 15, Revenue from contracts with customers 1 July 2018

HKFRS 16, Leases 1 July 2019

The Club is in the process of making an assessment of what the impact of these amendments and new standards is expected to be in the period of initial application. So far the Club has concluded that the adoption of them is unlikely to have a significant impact on the Club’s results of operations and financial position, with the exception of HKFRS 15, which may impact the Club’s revenue recognition policy in respect of entrance fees.

2.2 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of the Club are measured using the currency of the primary economic environment in which the Club operates (the “functional currency”). The financial statements are presented in Hong Kong dollars, which is the Club's functional and presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of income and expenditure and other comprehensive income.



2.3 Property, plant and equipment

Buildings represent clubhouses. Leasehold land classified as finance lease and all other property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Club and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are expensed in the statement of income and expenditure and other comprehensive income during the financial year in which they are incurred.

Leasehold land classified as finance lease commences amortisation from the time when the land interest becomes available for its intended use. Depreciation of leasehold improvements is calculated to write off their cost less accumulated impairment losses over the unexpired periods of lease or their expected useful lives of 10 years to the Club, whichever is shorter. Amortisation of leasehold land classified as finance lease and depreciation on other property, plant and equipment are calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

Leasehold land classified as finance lease Remaining lease term Buildings 40 years Furniture, fixture and equipment 5 years Computer equipment 3 years Motor vehicles 4 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 2.5).

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are recognised in the statement of income and expenditure and other comprehensive income.

2.4 Intangible assets

Intangible assets comprise golf club memberships with infinite useful life, which are stated at historical cost. Golf club memberships are tested annually for impairment and are carried at cost less impairment losses (note 2.5).

2.5 Impairment of non-financial assets

Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.



Notes to the Financial Statements(All amounts in Hong Kong dollars unless otherwise stated)


2.6 Financial assets at fair value through profit or loss

The Club classifies its investments as financial assets at fair value through profit or loss. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at the end of each reporting period. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Assets in this category are classified as current assets if they are expected to be realised within 12 months; otherwise, they are classified as non-current.

Regular way purchases and sales of financial assets are recognised on the trade-date – the date on which the Club commits to purchase or sell the asset. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the statement of income and expenditure and other comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Club has transferred substantially all risks and rewards of ownership.

Gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss are presented in the statement of income and expenditure and other comprehensive income in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the statement of income and expenditure and other comprehensive income as part of investment income, if any, when the Club’s right to receive payments is established.

2.7 Receivables

Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. If collection of receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

2.8 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Club or the counterparty.

2.9 Impairment of financial assets carried at amortised cost

The Club assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.



2.9 Impairment of financial assets carried at amortised cost (Continued)

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the statement of income and expenditure and other comprehensive income.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the statement of income and expenditure and other comprehensive income.

2.10 Inventories Inventories comprise food, beverage and non-edible products and are stated at the lower of cost and net

realisable value. Cost is determined using the first-in, first-out method and comprises invoiced purchase cost. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.11 Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdraft, if any.

2.12 Membership debentures and debenture premiums

Membership debentures, which are non-interest bearing, redeemable only at the option of the Board of Governors, and only transferable upon compliance with conditions established by the Board of Governors, are classified as funds of the Club. Premiums received upon issue of membership debentures are recognised as debenture premiums and are classified as funds of the Club.

Membership debentures are reclassified as liabilities when the Board of Governors approve the redemption of membership debentures, or when the membership debentures became payable upon certain conditions as set out under the terms of the membership debentures.

2.13 Capital and development fund

Capital and development fund is established to capture proceeds from sales of permanent memberships for the purpose of funding capital additions, replacement and development projects and to buy back the permanent membership. If any amount is expended from the fund, the same amount will be transferred out of this fund to the building fund.





2.14 Building fund

Building fund is established to capture the use of the capital and development fund from the date on which capital and development fund was established by the Club. The fund represents the net book value of property, plant and equipment which have been acquired as a result of expenditure financed by the capital and development fund. Transfers from the capital and development fund represent additions of property, plant and equipment. Transfers to accumulated fund represent depreciation charged on these property, plant and equipment during the year.

2.15 Payables

Payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

2.16 Employee benefits

(a) Bonus plans

The Club recognises a liability and an expense for bonuses, based on a formula that takes into consideration the results of the operation for the year and non-financial performance of each employee of the Club. The Club recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(b) Pension obligations

A defined contribution plan is a pension plan under which the Club pays fixed contributions into a separate entity. The Club has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The Club operates a defined contribution scheme under the Occupational Retirement Scheme Ordinance (“ORSO”) and a mandatory provident fund scheme (“MPF”) in Hong Kong, the assets of which are held in separate trustee-administered funds. The pension plans are funded by payments from employees and by the Club in accordance with the related rules and regulations of the pension plans.

The Club’s contributions to the ORSO scheme are expensed when they are due and are reduced by contributions forfeited by those employees who leave the scheme prior to vesting fully in the contributions. The Club’s contributions to MPF scheme are expensed as incurred. The Club has no further pension obligation other than those pension contributions required under the pension plans as described above.

(c) Termination benefits

Termination benefits are payable when employment is terminated by the Club before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Club recognises termination benefits at the earlier of the following dates: (a) when the Club can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of HKAS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer.



2.17 Provisions

Provisions are recognised when the Club has a present legal or constructive obligation, as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provision for reinstatement in respect of the Club’s leased office premises is measured at the present value of the expenditure expected to be required to incur to restore the office premises to their original state of conditions.

2.18 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Club’s activities.

The Club recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Club and when specific criteria have been met for each of the Club’s activities as described below. The Club bases its estimates on historical results, taking into consideration the type of transaction and the specifics of each arrangement.

(a) Membership income comprises of subscription fees. Subscription fees are recognised on an accruals basis. Subscription fees paid for periods after the end of the reporting period are classified as receipts in advance from members in the statement of financial position.

(b) Revenue from food and beverage are recognised when the catering services are rendered.

(c) Revenue from fitness and recreation services are recognised when the services are rendered.

(d) Marketing income mainly includes Country Store sales. Revenue from the sale of goods in the Country Store is recognised on the transfer of risks and rewards of ownership, which generally coincides with the time when the goods are delivered to customers and title has passed.

(e) Interest income is recognised on a time proportion basis using the effective interest method.

(f) Entrance fees represent sales of term memberships. The entrance fees are recognised on a straight-line basis over the term of the membership and fees relating to future periods are classified as deferred revenue in the statement of financial position.

(g) Debenture transfer fee is recognised when the transfer is approved by the Board of Governors.

(h) Debenture renomination fee is recognised when the member renomination is approved by the Board of Governors.

(i) Marketing income and other income are recognised on an accruals basis.





2.19 Operating leases (as a lessee)

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are expensed in the statement of income and expenditure and other comprehensive income on a straight-line basis over the period of the lease.

3 Financial risk and fund risk management

The Board of Governors has assigned the Club’s Finance Committee to provide oversight and guidance to the Club’s financial risk and fund risk management.

3.1 Financial risk factors

The Club’s activities expose it to a variety of financial risks factors including foreign exchange risk, price risk, credit risk, liquidity risk and cash flow interest rate risk. The Club’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Club’s financial performance.

(a) Foreign exchange risk

Foreign exchange risk arises when future commercial transactions, and recognised assets and liabilities are denominated in a currency that is not the Club’s functional currency. The Club is exposed to foreign exchange risk primarily with respect to United States dollars since the Club has significant financial assets in equity and fixed income markets, which are denominated in United States dollars. The Club currently does not have any foreign currency hedging policy.

However, United States dollars are reasonably stable under the Link Exchange Rate System, the Governors are of the opinion that the Club does not have significant foreign exchange risk. Accordingly, no sensitivity analysis is performed.

(b) Price risk

The Club is exposed to equity and fixed income securities price risk because investments held by the Club are classified as financial assets at fair value through profit or loss in the statement of financial position. The Finance Committee of the Club is responsible to monitor the investment fund manager’s performance and the price risk arising from investments in equity and fixed income securities. In additions, the investment fund manager diversified its investment portfolio in accordance with the investment policy, strategies and limits set by the Club.

Although some underlying assets of the funds invested by the Club are denominated in foreign currencies, the change in foreign exchange rates would be reflected in the market prices of the invested funds. As at 30 June 2017, if the price of equity and fixed income securities increased/decreased by a historical weighted average change of 7.17% (2016: 7.31%) with all other variables held constant and all the Club’s equity and fixed income securities moved according to the historical correlation, deficit for the year would have been HK$33,237,164 (2016: HK$32,211,940) lower/higher, as a result of revaluation gains on financial assets at fair value through profit or loss.


3 Financial risk and fund risk management (Continued)

3.1 Financial risk factors (Continued)

(c) Credit risk

Credit risk arises from financial assets at fair value through profit or loss, entrance fee receivables, accounts receivable from members, other receivables and cash and deposits at banks.

The Club has significant financial assets in equity and fixed income investments, and the fair value of these financial assets are highly dependent on market conditions. The Finance Committee regularly monitors the investment portfolio managed by the investment fund manager.

The Club has policies in place to control and monitor the creditability of the counterparties. The Club will write off directly or make provision for those receivables which are considered as irrecoverable. In this regard, the Governors are of the opinion that the Club’s exposure to such credit risk is prudently managed. The credit risk of liquid funds and security investments is limited because the counterparties are financial institutions with high credit ratings assigned by international credit-rating agencies.

The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position.

(d) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and short term bank deposits. Due to the nature of its underlying operations, the Board of Governors has designated HK$80 million (2016: HK$80 million) out of fixed deposits and financial assets at fair value through profit or loss as restricted reserve funds for maintaining the long term financial stability of the Club.

The table below analyses the Club’s financial liabilities into relevant maturity grouping based on the remaining period at the end of the reporting period to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Note 2017 2016

Less than 1 year Accounts payable 13 11,192,873 9,223,409 Accrued charges 13 15,978,913 38,169,739

27,171,786 47,393,148

In additions, as at 30 June 2017 and 2016, the Club had capital and operating lease commitments as disclosed in note 23.

(e) Cash flow interest rate risks

Other than cash at banks and fixed deposits which are interest bearing at prevailing market rates, the Club has no other interest bearing assets and liabilities. The Club’s income and operating cash flows are generally independent of changes in market interest rates. Accordingly, the Governors are of the opinion that the Club does not have significant cash flow interest rate risk and no sensitivity analysis is performed.





3.2 Funds risk management

The Club’s objectives when managing funds are to safeguard the Club’s ability to continue as a going concern, by procuring adequate financial resources from its members and by adjusting the level of its investments. The Club’s overall strategy remains unchanged from prior year.

3.3 Fair value estimation

The table below analyses the Club’s financial instruments carried at fair value by level of the inputs to valuation techniques used to measure fair value. Such inputs are categorised into three levels within a fair value hierarchy as follows:

• Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities(level1).• Inputsotherthanquotedpricesincludedwithinlevel1thatareobservablefortheassetorliability,either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).• Inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(thatis,unobservableinputs) (level 3).

The following table presents the Club’s financial assets that are measured at fair value at 30 June.

2017 2016 Financial assets included in level 2 Financial assets at fair value through profit or loss - Investment managed by BlackRock Institutional Trust Company, N.A. (note 7) 479,281,871 463,558,774

There were no transfers between levels 1 and 2 during the year.

(a) Financial instruments in level 2

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Specific valuation techniques used to value financial instruments include:

• Quotedmarketpricesordealerquotesforsimilarinstruments. • Thefairvalueofinterestrateswapsiscalculatedasthepresentvalueoftheestimatedfuturecashflows based on observable yield curves. • Thefairvalueofforwardforeignexchangecontractsisdeterminedusingforwardexchangeratesatthe end of the reporting period, with the resulting value discounted back to present value. • Othertechniques,suchasdiscountedcashflowanalysis,areusedtodeterminefairvalueforthe remaining financial instruments.



3.3 Fair value estimation (Continued)

(a) Financial instruments in level 2 (Continued)

The carrying values less impairment provision of receivables and payables are a reasonable approximation of their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Club for similar financial instruments.

All other financial assets and liabilities are carried at amounts not materially different from their fair values as at 30 June 2017 and 2016.

4 Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Club makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

Fair value of investments not quoted in an active market

The financial assets at fair value through profit or loss are not quoted in active markets. The fair value of financial assets at fair value through profit or loss was calculated using the net asset value of the investment funds as reported by the fund manager. For these funds, the management believes that they could have redeemed these investments at the net asset value per fund unit at the end of each reporting period. If necessary, the Club makes adjustments to the net asset value of the respective fund to obtain the best estimate of fair value.




5 Property, plant and equipment

Leasehold Leasehold Furniture, land and Construction improve- fixture and Computer Motor buildings in progress ments equipment equipment vehicles Total

Year ended 30 June 2017 Opening net book amount 129,000,750 - 101,298,486 85,061,207 1,518,339 329,217 317,207,999 Additions - - 7,079,468 7,208,456 577,879 - 14,865,803 Disposals - - (377,323) (47,380) (23,333) - (448,036) - Cost - - (3,389,404) (1,020,767) (140,000) - (4,550,171) - Accumulated depreciation - - 3,012,081 973,387 116,667 - 4,102,135 Depreciation (5,586,120) - (17,645,023) (23,982,283) (842,104) (148,958) (48,204,488)

Closing net book amount 123,414,630 - 90,355,608 68,240,000 1,230,781 180,259 283,421,278

At 30 June 2017 Cost 255,529,346 - 207,909,260 197,872,696 15,994,227 1,110,814 678,416,343 Accumulated depreciation (132,114,716) - (117,553,652) (129,632,696) (14,763,446) (930,555) (394,995,065)

Net book amount 123,414,630 - 90,355,608 68,240,000 1,230,781 180,259 283,421,278



5 Property, plant and equipment (Continued)

Leasehold Leasehold Furniture, land and Construction improve- fixture and Computer Motor buildings in progress ments equipment equipment vehicles Total

At 1 July 2015 Cost 255,529,346 48,883,891 151,334,100 145,570,998 14,356,327 972,366 616,647,028 Accumulated depreciation (120,942,476) - (98,601,754) (120,374,377) (12,892,815) (765,839) (353,577,261)

Net book amount 134,586,870 48,883,891 52,732,346 25,196,621 1,463,512 206,527 263,069,767

Year ended 30 June 2016 Opening net book amount 134,586,870 48,883,891 52,732,346 25,196,621 1,463,512 206,527 263,069,767 Transfers from prepayments - - - 846,808 - - 846,808 Additions - 92,158,107 950,169 7,380,593 1,055,680 320,462 101,865,011 Transfers - (141,041,998) 65,238,000 75,659,657 144,341 - - Disposals - - (1,734,847) (2,754,024) - - (4,488,871) - Cost - - (13,303,073) (37,773,049) - (182,014) (51,258,136) - Accumulated depreciation - - 11,568,226 35,019,025 - 182,014 46,769,265 Depreciation (5,586,120) - (15,887,182) (21,268,448) (1,145,194) (197,772) (44,084,716)

Closing net book amount 129,000,750 - 101,298,486 85,061,207 1,518,339 329,217 317,207,999

At 30 June 2016 Cost 255,529,346 - 204,219,196 191,685,007 15,556,348 1,110,814 668,100,711 Accumulated depreciation (126,528,596) - (102,920,710) (106,623,800) (14,038,009) (781,597) (350,892,712)

Net book amount 129,000,750 - 101,298,486 85,061,207 1,518,339 329,217 317,207,999

Construction in progress as at 30 June 2015 comprised the costs directly attributable to the renovation work in Town Club which has been completed during the year ended 30 June 2016.

Depreciation expense of HK$48,204,488 (2016: HK$44,084,716) has been included in the statement of income and expenditure and other comprehensive income as follows:

2017 2016 Operating depreciation 24,973,345 22,611,414 Capital depreciation 23,231,143 21,473,302

48,204,488 44,084,716


6 Financial instruments by category

The Club’s financial instruments include the following:

Note 2017 2016 Financial assets Loans and other receivables Entrance fee receivables 9 5,087,500 - Accounts receivable from members 10 17,708,151 16,782,962 Deposits and other receivables 11 5,425,969 5,856,500 Bank deposits with original maturities over three months 12 71,939,857 - Cash and cash equivalents 12 83,640,731 129,132,466

183,802,208 151,771,928

Assets at fair value through profit or loss Financial assets at fair value through profit or loss 7 479,281,871 463,558,774 663,084,079 615,330,702

Financial liabilities Other financial liabilities at amortised cost Accounts payable 13 11,192,873 9,223,409 Accrued charges 13 15,978,913 38,169,739

27,171,786 47,393,148

7 Financial assets at fair value through profit or loss

2017 2016 Investments managed by BlackRock Institutional Trust Company, N.A., at fair value - Unlisted unit trusts - equity securities 148,823,900 125,246,220 - Unlisted unit trusts - fixed income securities 330,457,971 338,312,554

479,281,871 463,558,774

Financial assets at fair value through profit or loss are presented within “investing activities” in the statement of cash flows.

Changes in the fair values of financial assets at fair value through profit or loss are recorded in “investment gains, net” in the statement of income and expenditure and other comprehensive income.

The fair values of all unlisted unit trusts are based on their bid prices from brokers. The fair values are within level 2 (2016: level 2) of the fair value hierarchy (see note 3.3).

The maximum exposure to credit risk at the end of the reporting period is the carrying amount of financial assets at fair value through profit or loss.

The carrying amounts of financial assets at fair value through profit or loss are denominated in United States dollars.




8 Intangible assets - golf club memberships

The balance represents 10 (2016: 10) memberships in Lotus Hill Golf Resort in the People’s Republic of China and 10 (2016: 10) memberships in Macau Golf and Country Club, which are stated at cost. The golf club memberships are available for use by the members.

9 Entrance fee receivables

2017 2016 Entrance fee receivables, maximum exposure to credit risk 5,087,500 -

The entrance fee receivables were unsecured, interest free and recoverable by 30 November 2017.

The maximum exposure to credit risk at the end of the reporting period is the carrying value of entrance fees receivables which approximates its fair value and is denominated in Hong Kong dollars.

The Club does not hold any collateral as security.

10 Accounts receivable from members 2017 2016 Accounts receivable from members, maximum exposure to credit risk 17,708,151 16,782,962

As at 30 June 2017, accounts receivable from members of HK$1,060,362 (2016: HK$670,854) were past due but not impaired. These relate to members for whom there are no recent history of default. The Club does not hold any collateral over these balances. The aging analysis of these accounts receivable from members which are past due but not impaired is as follows:

2017 2016 Aging of past due but not impaired 1- 30 days 770,872 523,982 31-60 days 185,740 128,249 Over 60 days 103,750 18,623

1,060,362 670,854

As at 30 June 2017 and 2016, the Club has not made any direct write off on accounts receivable from members.

The carrying values of accounts receivable from members approximate their fair values as at 30 June 2017 and 2016, and are denominated in Hong Kong dollars.



11 Deposits, prepayments and other receivables

2017 2016

Rental deposits 1,577,510 1,683,205 Utility deposits 2,030,700 2,052,500 Interest receivable 471,757 101,226 Other receivables 1,346,002 2,019,569

Financial assets, maximum exposure to credit risk 5,425,969 5,856,500 Payments in advance for purchases 1,580,271 1,218,124 Payments in advance for repair and maintenance work and renovation work 15,922,373 2,110,345 Other prepayments 2,215,074 3,304,649

Total deposits, prepayments and other receivables 25,143,687 12,489,618 Less: non-current rental deposits (796,975) (210,000)

Current portion included in current assets 24,346,712 12,279,618

The deposits, prepayments and other receivables do not contain impaired assets. The Club does not hold any collateral over these balances.

The carrying values of deposits, prepayments and other receivables approximate their fair values as at 30 June 2017 and 2016, and are denominated in Hong Kong dollars.

12 Bank deposits with original maturities over three months and cash and cash equivalents

2017 2016

Bank deposits with original maturities less than three months 31,724,693 78,095,951 Cash at banks and cash in hand 51,916,038 51,036,515

Cash and cash equivalents 83,640,731 129,132,466 Bank deposits with original maturities over three months 71,939,857 - 155,580,588 129,132,466

Maximum exposure to credit risk 155,519,588 129,051,466

The effective interest rate on bank deposit with original maturities less than 3 months is 1% (2016: 0.64%); this deposit has a maturity of 35 days (2016: 19 days) as at 30 June 2017. The effective interest rate on bank deposits with original maturities over three months are 0.88% (2016: Nil); these deposits have average maturities of 43 days (2016: Nil).

Included within fixed deposits and financial assets at fair value through profit or loss (note 7) are funds totalling HK$80 million (2016: HK$80 million) which have been designated by the Board of Governors as restricted reserve funds. The purpose of these restricted funds is to maintain the long term financial stability of the Club.



13 Accounts payable, accrued charges and provision for reinstatement of the Club’s leased office premises 2017 2016

Provision for reinstatement of the Club’s leased office premises 654,740 1,076,900 Accounts payable and accrued charges 32,540,864 52,478,886 33,195,604 53,555,786

2017 2016

Accounts payable 11,192,873 9,223,409 Accrued charges 15,978,913 38,169,739 Financial liabilities 27,171,786 47,393,148 Deposits received from customers for holding functions at the Club 3,131,900 3,120,950 Deposits received from members for fitness and recreation programs 2,237,178 1,964,788 Provision for reinstatement of the Club’s leased office premises 654,740 1,076,900 33,195,604 53,555,786 Less: non-current portion (654,740) -

Current portion included in current liabilities 32,540,864 53,555,786

The carrying values of accounts payable and accrued charges approximate their fair values as at 30 June 2017 and 2016, and are denominated in Hong Kong dollars.

The fair value of provision for reinstatement of the Club’s leased office premises equals its carrying amount as the impact of discounting is not significant.

14 Membership debentures and debenture premiums

Number of membership Membership Debenture debentures debentures premiums

Town Full HK$ HK$

Balances as at 1 July 2015, 30 June 2016, 1 July 2016 and 30 June 2017 263 884 611,729,000 18,660,000

Membership debentures are non-interest bearing, redeemable at the option of the Board of Governors, and only transferable upon compliance with conditions established by the Board of Governors. Premiums received upon issue of membership debentures are recognised as debenture premiums and are classified within funds as equity of the Club. A debenture holder may nominate any resident of Hong Kong to become a member of the Club. A nominee of a Town debenture holder, if accepted, has the right to use the facilities of the Town Clubhouse only, whereas a nominee of a Full debenture holder, if accepted, has the right to use all the facilities of the Club.


15 Revenue and other income

The principal activities of the Club are the provision of dining, fitness and other recreational facilities and activities for its members. Revenue and other income recognised during the year are as follows:

2017 2016 Operating income Membership 94,485,636 92,300,670 Food and beverage 105,508,792 88,513,160 Fitness and recreation 26,761,659 24,105,525 Sales in Country Store 12,317,824 10,085,447 Marketing 348,926 281,977 Interest income from bank deposits 939,925 592,764 Others 5,356,169 4,741,089

Total operating income 245,718,931 220,620,632

Additional membership income Entrance fees - term memberships 4,794,000 4,824,000 Transfer fees 23,150,000 16,855,000 Debenture renomination fees 4,260,000 4,530,000

Total additional membership income 32,204,000 26,209,000

Less: Interest income from bank deposits (939,925) (592,764)

Total revenue 276,983,006 246,236,868

16 Cost of sales

2017 2016

Food and beverage 39,720,878 32,944,925 Fitness and recreation 14,659,569 12,998,599 Merchandise in Country Store 7,761,511 6,489,941 Others 28,931 28

62,170,889 52,433,493

The cost of inventories recognised as expense and included in cost of sales amounted to HK$62,170,889 (2016: HK$52,433,493). The amount for the year ended 30 June 2017 included a provision for inventories of HK$44,409 (2016: HK$112,183) within “merchandise in Country Store” in cost of sales.




17 Employee benefit expense

2017 2016

Salaries, bonuses and allowances 104,744,747 101,731,654 Termination benefits 303,020 1,723,266 Pension costs - defined contribution plans 5,907,653 6,113,019

110,955,420 109,567,939

Employee benefit expense includes the following key management compensations:

2017 2016

Salaries, bonuses and allowances 24,271,765 28,185,358 Pension costs – defined contribution plans 1,745,364 1,756,218

26,017,129 29,941,576

18 Benefits and interest of Governors

The following disclosures are made pursuant to section 383(1)(a) to (f) of the Hong Kong Companies Ordinance (Cap. 622), and Parts 2 to 4 of the Hong Kong Companies Ordinance (Disclosure of Information about Benefits of Directors) Regulation (Cap. 622G).

During the year ended 30 June 2017, no emoluments, retirement benefits, payments or benefits in respect of termination of Governors' services were paid or made, directly or indirectly, to the Governors; nor are any payable (2016: nil). No consideration was provided to or receivable by third parties for making available Governors' services (2016: nil). There are no loans, quasi-loans or other dealings in favour of the Governors, their controlled bodies corporate and connected entities (2016: nil).

No Governor of the Club had a material interest, directly or indirectly, in any significant transactions, arrangements and contracts in relation to the Club’s business to which the Club was or is a party that subsisted at the end of the year or at any time during the year (as at and for the year ended 30 June 2016: nil).


19 Operating expenses

2017 2016

Utilities 12,059,820 12,372,713 Government rent and rates 5,284,679 5,144,902 Contract cleaning 5,474,917 4,641,261 Security services 4,659,290 4,988,250 Equipment repairs 3,931,300 2,599,682 Information technology 4,523,368 4,529,933 Insurance 1,115,705 1,274,708 Building management 2,515,048 2,551,995 Laundry 3,174,847 2,689,549 Printing 1,535,821 1,563,384 Marketing and promotion 1,532,848 1,130,304 Auditor’s remuneration 480,000 473,085 Facilities management and treasury service fees 1,020,000 595,000 Supplies 3,889,472 3,938,900 Miscellaneous expenses 10,327,526 12,070,421

61,524,641 60,564,087

20 Investment gains, net

2017 2016

Unrealised gain on financial assets at fair value through profit or loss 16,146,237 23,365,822 Investment advisory fee to investment fund manager and investment consultant (324,723) (219,599) Realised loss on financial assets at fair value through profit or loss (423,140) (462,865)

15,398,374 22,683,358

21 Taxation

No provision for Hong Kong Profits Tax has been made in the financial statements as the Club is deemed not to carry on a business under Section 24(1) of the Inland Revenue Ordinance and its income is exempted.




22 Notes to the statement of cash flows

(a) Cash generated from operations

2017 2016 Surplus/(deficit) for the year 6,732,123 (4,899,268) Adjustments for: - Depreciation (note 5) 48,204,488 44,084,716 - Loss on disposal of property, plant and equipment (note 22(b)) 444,036 4,415,871 - Interest income from bank deposits (note 15) (939,925) (592,764) - Unrealised gain on financial assets at fair value through profit or loss (note 20) (16,146,237) (23,365,822) - Realised loss on financial assets at fair value through profit or loss (note 20) 423,140 462,865 Changes in working capital: - Inventories (50,655) (143,898) - Entrance fee receivables (5,087,500) - - Accounts receivable from members (925,189) (947,541) - Deposits, prepayments and other receivables (12,283,538) (1,298,018) - Accounts payable and accrued charges (20,271,572) 23,805,134 - Deferred revenue 309,800 (474,000) - Receipts in advance from members (119,230) 1,529,560 - Provision for reinstatement (422,160) -

Cash (used in)/generated from operations (132,419) 42,576,835

(b) In the statement of cash flows, proceeds from disposal of property, plant and equipment comprises:

2017 2016

Net book amount (note 5) 448,036 4,488,871 Loss on disposal of property, plant and equipment (444,036) (4,415,871)

Proceeds from disposal of property, plant and equipment 4,000 73,000


23 Commitments

(a) Capital commitments on property, plant and equipment

Capital expenditure at the end of the reporting period but not yet incurred is as follows:

2017 2016 Contracted but not provided for 23,523,301 1,838,562 Authorised but not contracted for 115,998,722 55,087,726

139,522,023 56,926,288

(b) Operating lease commitments

The future aggregate minimum lease payments under non-cancellable operating lease in respect of office premises are as follows:

2017 2016 No later than 1 year 3,092,909 5,153,566 Later than 1 year and no later than 5 years 5,669,260 1,338,692

8,762,169 6,492,258

24 Involvement with unconsolidated structured entities The table below describes the Club’s investments in unit trust funds, which for the purpose of HKFRS 12, Disclosure of interests in other entities, falls within the definition of unconsolidated structured entities.

Type of structured entity Natures and purposes Interest held by the Club

Unit trust funds To manage assets on behalf of Investments in units issued investors and generate fees for by the unit trust funds the investment managers.

These vehicles are financed through the issue of units to the investors.



24 Involvement with unconsolidated structured entities (continued) The table below sets out interests held by the Club in unconsolidated structured entities. The maximum exposure to loss is the carrying amount of the financial assets held.

As at 30 June 2017

Number of Total net assets of Carrying amount included Structured entities investee funds investee funds in financial assets

Unit trust funds 2 2,699,498,796 479,281,871

As at 30 June 2016

Number of Total net assets of Carrying amount included Structured entities investee funds investee funds in financial assets

Unit trust funds 2 2,590,590,091 463,558,774

During the year, except for the amounts invested in the unconsolidated structured entities, the Club did not provide financial support to the unconsolidated structured entities and had no intention of providing financial or other support.


Mission StatementWe are dedicated to being a premier Club in Hong Kong which provides a gathering place for social, recreational and business activities for Members and their families in a distinctive American atmosphere.

In achieving our mission, we will......

• MaintainacommitmenttoanAmericanidentity.• MaintainaClubenvironmentwhichisopen and hospitable.• Providequalityservicesandproductsatafair value.• Maintainfiscalresponsibility.• Projectapositiveimagewithinourcommunity.• BeresponsivetoourMembers.

Annual Report 2016/2017

TOWN CLUBFloors 48 & 49, Two Exchange Square, Central, Hong Kong

COUNTRY CLUB28 Tai Tam Road, Tai Tam, Hong Kong

Telephone : (852) 2842 7400Facsimile : (852) 2147 3867Email : [email protected] : www.americanclubhk.com Designed by www.linkupdesign.com

mailto:[email protected]

http://www.americanclubhk.com/

http://www.linkupdesign.com/

Documents

Annual Report 2016/2017 - The American Club Hong Kong … · The American Club nnal Report 2012017 1 Board of Governors 2017 From left to right Bottom row: Jim Robinson (Secretary),