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Value Added
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For the first time this year, the bank provides an analysis of Value Added. Value Added expresses the contribution to national wealth made by a commercial organisation and seeks to recognise that a variety of Partners can benefit from such wealth creation. For example, Value Added can be disbursed to staff in the form of wages, to the state in the form of taxation, and to owners in the form of dividends and reserves.
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The Co-operative Bank Value Added (£m) |
| Operating Profit = Profit before tax (including interest income) + gross interest cost less gains (or plus losses) arising from sale/disposal of businesses or assets. |
122.5 |
| Employee Costs = Total Employment Costs (wages & salaries, social security and pension costs). |
122.0 |
| Depreciation and Amortisation = Depreciation on owned assets and assets held under financial leases + Amortisation of goodwill and other intangible assets. |
20.1 |
| Value Added | 264.6 |
(Source: Co-operative Bank, Financial Statements 2002)
The above analysis is based upon a model of 'Value Added' advanced by the UK Government's Department of Trade and Industry 1 . 'Value Added' is defined as 'sales less the cost of bought-in goods and services, and represents the wealth created by the activities of the company' 2. The following graph benchmarks The Co-operative Bank's 'Value Added per employee' against industry averages amongst the UK service sector.
(Source: The Co-operative Bank figures: Sustainable Development Team 2003. Industry Average and Companies Composite figures: DTI, The 2003 Value Added Scoreboard - Commentary and Analysis)
Value Added per employee indicates the value added per job in a company, but takes no account of the capital equipment backing up each employee. Value Added per employee is probably the most comparable figure to the commonly-quoted GDP/employee.
An alternative way of presenting Value Added is described by SPI Finance 3. This methodology seeks to address Value Added from the perspective of wealth distribution (as opposed to wealth generation) and is derived from the addition of those elements of a company's economic value which are shared amongst owners, staff and the state. Of the £264.6 million Value Added created by The Co-operative Bank, £106.0 million (40.1%) is distributed to the bank's owners, £36.6 million (13.8%) to the state and £122.0 million (46.1%) to staff.
- www.innovation.gov.uk/projects/value_added/highlights.html
- DTI, The 2003 Value Added Scoreboard
- www.spifinance.com
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To follow any of the links mentioned within the Partnership Report 2002, please visit the links page.
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