asked Her Majesty's Government:
Whether full open market valuations were applied to properties owned by the Defence Evaluation Research Agency when they were transferred to QinetiQ in 2001; and, if so, which valuer conducted the evaluations.[HL7008]
In accordance with Financial Reporting Standards, the properties were transferred to QinetiQ at fair acquisition value. This was derived from a valuation carried out by GVA Grimley LLP, with a valuation date of 30 June 2001. That was then adjusted to take account of certain additional site-specific factors, including details of lease arrangements and work carried out by environmental consultants to assess potential contamination. Valuations were carried out in accordance with the Royal Institution of Chartered Surveyors (RICS) manual of valuation and the practice statements for the valuation of properties in company accounts. The basis of the Grimley valuation was as follows:
for properties which, at the time of transfer, were seen as likely to be sold by QinetiQ, the Grimley valuation was on the basis of open market value (OMV);
for those properties which were anticipated to remain in use to support the ongoing business activities of the company, the valuation was, in accordance with accounting and Stock Exchange rules, based on the depreciated replacement cost (DRC). For technical reasons relating to specific properties, there were a small number of exceptions to this approach. These were: Alverstoke (transferred at OMV); Portsdown Technology Park (transferred at adjusted OMV to take account of certain environmental and other liabilities); Fort Halstead and Winfrith (where complex leasing arrangements required a separate assessment of fair value).
Separate clawback arrangements exist to ensure that the taxpayer shares in any excess gains from property disposals. The values used for calculating clawback are based on the unadjusted Grimley valuations and consequently may differ from the valuations used for the transfer of property from DERA to QinetiQ.