Q101 Mr Davidson: Did Permira ever comment on the pension fund deficit or did they not have the right to do so?
Mr Woolley: Their bid would have been subject to the position of the pension fund deficit.
Q102 Mr Davidson: But so was Carlyle's and then Carlyle's changed because of information about the pension fund. Did you not then go back to Permira and say, "Look, here is the same information, what is your view on this?" That could have changed the financial balance.
Mr Woolley: There would be no reason why it would have a different impact between the two bidders, the effect of the pension fund deficit.
Q103 Mr Davidson: But you did not ask the other people?
Mr Woolley: At that stage Carlyle were already the preferred bidder.
Q104 Mr Davidson: So that is a no then, is it? That is a no, you did not?
Mr Woolley: We did not specifically go back to Permira on that point.
Q105 Mr Davidson: That is a no, that is fine. I just wanted to clear that up.
Mr Schofield: Mr Davidson, it is also worth adding that the Government Actuary's Department made their own assessment.
Q106 Mr Davidson: All these people would have made assessments of the position before they made their bids and then Carlyle got their foot in the door and changed their bid, I understand that. Can I just clarify a point that has been made quite strongly on a number of occasions about the rise in value and so on. How much of this has simply been because of a general rise in the market? I notice around about that time there was a general uplift, was there not, both in defence and technology share prices and, therefore, there was a substantial element of simply a windfall gain. I take it there was nothing in the contract that would lead you to have an automatic, as it were, claw back of any windfall gains of that sort. Nor was there any recognition, as I understand it, in terms of the huge amounts of money that Sir John got away with of the simple rise in the market. How was that dealt with?
Mr Jeffrey: It is certainly the case that some of the growth in the value of the company between the sale of the minority stake in early 2003 and the flotation in early 2006 reflected conditions in the market, but it also reflected the success of the company in finding new business.
Q107 Mr Davidson: What was the balance?
Mr Jeffrey: I do not have that figure in my head. I think they were both substantial elements.
Q108 Mr Davidson: Sir John, you are going to tell me.
Sir John Chisholm: I do not have the number but the point I made earlier on was if you look at the things that the analysts now pick out as being valuable in QinetiQ today, they are not the things that were predominantly in the company at the time of the PPP.
Q109 Mr Davidson: I think that is interesting.
Sir John Chisholm: The value has been added since then.
Q110 Mr Davidson: That is interesting but it is not actually an answer to the point I made because I was asking for a balance between the value added by yourselves and your management and the general rise in profits.
Mr Schofield: Mr Davidson, I could give you some numbers. As the Report shows, the rise of the operating profits was something like 260% and there was also an improvement in the contribution in terms of cash generation of today's profits. In terms of the benefit from the performance of the business there is that element. In terms of the market, the aerospace and defence sector in the UK in December 2002 was trading on a PE multiple-price earnings multiple-of 10.8 times and at the time of the flotation in February 2006 was on 17.2 times. What you will see is 260% from the performance of the business and about 70% from the movement in the stock market.