The Christie NHS FT Annual Report & Accounts 2019-20

1.4.2 Valuation

Property, Plant and Equipment assets are stated at the lower of replacement cost and recoverable amount. On initial recognition the assets are measured at cost (for leased assets, fair value) including any costs such as installation directly attributable to bringing them into working condition. The carrying values of Property, Plant and Equipment assets are reviewed for impairment in periods if events or changes in circumstances indicate the carrying value may not be recoverable. All land and buildings are restated to current value using a full professional valuation every five years and a valuation by an independent professional valuer annually. If the fair value of a revalued asset differs materially from its carrying amount, an independent valuation is carried out for that class of asset. Valuations are carried out by professionally qualified valuers in accordance with the Royal Institution of Chartered Surveyors (RICS) Appraisal and Valuation Manual. This year's valuation was undertaken by Mrs S Hall (MRICS) of the Valuation Office Agency (VOA). The next full valuation will be carried out in 2023-24. The valuation exercise was carried out in March 2020 with a valuation date of 31 March 2020. In applying the Royal Institute of Chartered Surveyors (RICS) Valuation Global Standards 2020 ('Red Book'), the valuer has declared a material valuation uncertainty' in the valuation report. This is on the basis of uncertainties in the markets caused by Covid-19. The material valuation uncertainty disclosure by the valuer is as follows: “The outbreak of Covid-19, declared by the World Health Organisation as a global pandemic on 11 March 2020, has impacted on global financial markets. On 18 March 2020, the RICS published guidance to the profession in relation to material valuation uncertainty in response to Covid-19 impact on individual markets. Further RICS guidance – Impact of Covid-19 on Valuation - was issued on 15th April 2020. This is an evolving and fast moving situation, as new government and regulatory requirements are announced daily alongside economic predictors and forecasts, and as an organisation the VOA are currently involved in RICS led profession discussions as to how to address the unprecedented circumstances. The duration of the impact and understanding of likely short, medium to long term effects are hard to predict currently. As further market evidence comes available then the full extent of the Covid-19 impact will become clearer. We therefore strongly recommend that a future impairment review is also undertaken.” The values in the report have been used to inform the measurement of property assets at valuation in these financial statement. With the valuer having declared this material valuation uncertainty, the valuer has continued to exercise professional judgement in providing the valuation and this remains the best information available to the Trust. The valuations are carried out primarily on the basis of Depreciated Replacement Cost of a Modern Equivalent Asset for specialised operational property and Market Value for Existing Use for non-specialised operational property. The value of land for existing use purposes is assessed on the alternative site basis. For non-operational properties including surplus land, the valuations are carried out at Open Market Value.

Plant and equipment assets in the course of construction are valued at cost. The Trust does not revalue this class of assets. Costs include borrowing costs where capitalised under circumstances as defined under IAS 23.

Operational equipment is valued at depreciated historic cost. An item of Property, Plant and Equipment which is surplus with no plan to bring it back into use is valued at fair value under IFRS 13, if it does not meet the requirements of IAS 40 or IFRS 5.

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