Indigenous Land Corporation gpo box 652 Adelaide sa 5001

ILC

In the process of applying the accounting policies in this note, the Corporation has made a judgement regarding the valuation and impairment of property, plant and equipment and intangibles (refer notes 5H, 10F, 10G and 10L).

All assets were assessed for impairment at 30 June in accordance with AASB 136 Impairment of Assets.

Consolidated

Voyages engaged McGrath Nicol Corporate Advisory to prepare a valuation of Ayers Rock Resort for the purpose of testing for impairment and assessment of the fair value of assets, less costs to sell of Ayers Rock Resort assets at the balance date. The valuation has been undertaken using the income approach, using the Discounted Cash Flow (“DCF”) method as the primary methodology. This technique was deemed by McGrath Nicol as a preferred method given the unique operating and investing characteristics of Ayers Rock Resort.

McGrath Nicol has estimated the fair value less costs to sell of Ayers Rock Resort to be in the range of $220m to $260m. Pre-tax discount rate applied to the cash flow range is 11.93% and 10.75%, respectively. Post-tax discount rate applied to the cash flow range is 10.06% and 9.06%, respectively.

The valuations assumes a gradual recovery in the tourism market which along with the improvements made to the resort is expected to see trading levels return to normal historical levels within the period of the forecast used in the valuation.

Voyages Directors have considered the range of values estimated by McGrath Nicol and have assessed the risks associated with the cash flow forecast and other key assumptions used to determine the range of values. Based on these considerations, the Voyages Directors have determined that the assets which comprise the cash generating unit (CGU) of Ayers Rock Resort have an aggregate fair value less costs to sell at 30 June of $225m. An impairment loss of $18.893m (Land $1.451 million, Property, plant and equipment $5.850 million and Intangibles $11.592 million) has been recognised in the statement of comprehensive income to restate the carrying amount of these assets to fair value. Refer notes (5G, 10F, 10G and 10L).

1.5 Significant accounting judgements and estimates (cont.)

Key assumptions used in fair value calculations

The calculation of fair value of the Ayers Rock Resort CGU is most sensitive to the following assumptions:

• Discount rate

• Resort occupancy

Discount rate – The discount rate represents the current market assessment of the risks specific to the CGU, taking into account the time value of money. The discount rate is determined based on an assessment of the current market for sale of assets of a similar risk profile and is based on comparable market transactions.

Resort occupancy – Resort occupancy has been forecast based on an analysis of key market segments and expected growth in these markets over the forecast period. The forecast also takes account of strategic initiatives to grow key market segments such as the conference and events market following the development of the resort’s conference facilities. Occupancy is forecast to gradually return to historical levels.

Sensitivity to changes in assumptions

The recoverable amount of the Ayers Rock Resort CGU is equal to its carrying value and consequently any adverse change in a key assumption would result in a further impairment loss.

Discount rate – The discount rate reflects the prevailing conditions in the hotel investment market which are subject to change based on investor sentiment and economic conditions. A range of discount rates was considered when calculating the fair value of the Ayers Rock Resort CGU and the independent valuation is of the view that the discount rate selected is appropriate in the current market. An increase in the discount rate of 0.5% would result in a further impairment of approximately $20m.