The American Club 2017/2018 Annual Report

THE AMERICAN CLUB

NOTES TO FINANCIAL STATEMENTS 30 June 2018

4. FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (cont’d)

(v) Liquidity risk management

Liquidity risk arises from the possibility that the Club is unable to meet its obligations towards other counterparties.

The Club aims to maintain flexibility in funding by maintaining sufficient cash and bank balances, and internally generated cash flows to finance its activities.

All financial liabilities in 2018 and 2017 are repayable on demand or due within 1 year from the end of the reporting period. The effective interest rates, where applicable, are disclosed in the respective notes to the financial statements.

(vi)Fair value of financial assets and liabilities

The carrying amounts of cash and cash equivalents, due from/to members and other receivables and payables, provisions and other liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The Club has carried all investment securities that are classified as available-for-sale financial assets at their fair value, obtained from quoted market prices, discounted cash flow models and option pricing models as appropriate. Except as detailed in the following table, the General Committee considers that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair values:

47 2017/18 ANNUAL REPORT