Login

Value Added and the Value Added Scoreboard - Page 3

THE VALUE ADDED SCOREBOARD

This includes measures of:

For each of the above categories it also shows the % change year on year.

An important focus of the scoreboard as with the Gilcrist and Henry research is that of productivity.

PRODUCTIVITY AND VALUE ADDED

The scoreboard states that “

To put figures in context by value and sectors, the following diagrams are taken from “the value added scoreboard”.

(1) Value added ratios, top 300 European companies and sectors

 

VA / Employee

VA / Employee

VA / Employee

European Sector

 

Costs and Depreciation

Costs

 

£000's

%

%

 

 

(P2)

(P1)

 

 

 

 

Oil and gas

192

(246)

264%

(267)

526%

Insurance

98

*(33)

228%

(125)

244%

Pharmaceuticals

95

(104)

202%

(212)

236%

Banks

73

(82)

173%

(214)

196%

Telecoms

74

(94)

145%

(154)

271%

Chemicals

61

(51)

141%

(148)

180%

Diversified

53

(37)

137%

(146)

179%

Automotive

46

(39)

121%

(120)

167%

Electronics

40

(31)

127%

(126)

146%

General retail

21

(21)

131%

(137)

152%

Support services

18

(23)

119%

(117)

127%

All sector ratios

50

(47)

153%

(162)

197%

Figures shown in brackets are figures for corresponding UK sectors

*only three companies

THE TWO VALUE ADDED RATIOS AND EUROPEAN SECTORS CLASSIFIED USING THEM

Value added per Employee

 

 

 

 

(P1)

 

 

 

 

 

 

 

 

High

 

 

Average

 

 

 

 

£50,000

High value added, but high employee or depreciation costs (IT services and chemicals)

 

16%

High value added compared to both number of employees and costs (eg oils and gas, banks, pharmaceuticals)

37%

 

 

 

Low

 

 

Lower value added (eg retail, support services, construction engineering)

39%

 

Lower costs relative to value added (eg food processors)

 

8%

 

 

 

 

 

 

153%

 

 

Low Average High

 

 

 

 

 

 

(P2) Value Added %

 

 

Employee Costs and Depreciation

Earlier I cited the measure of value added per £ of employee costs for a number of UK companies from Henry's research in the early nineties.

Here we compare the past performance with figures taken from the recent DTI publication.

 

Company

Value Added per £ Employee Costs

 

 

 

Henry's 90's Research

Value Added

Scoreboard 2001

 

 

 

Glaxo - Smith Kline

2.80

2.64

Tarmac (now part of Anglo American)

2.29

2.74

BT

2.12

2.45

Guinness (now part of Diageo)

3.09

2.66

ICI

1.89

1.80

Comparison of company performance, value added per £ of employee costs to sector, (Dunn 2002)

 

Company

VA per £

Employee Cost

 

 

Company

 

Sector UK

 

 

 

Glaxo - Smith Kline

2.64

2.52

Tarmac (now part of Anglo American)

2.74

3.12

BT

2.45

2.78

Guinness (now part of Diageo)

2.66

2.33

ICI

1.80

2.19

Value Added, per the Scoreboard 2001

 

£Bn

 

Glaxo - Smith Kline

11.90

 

Tarmac (now part of Anglo American)

5.80

 

BT

11.30

 

Guinness (now part of Diageo)

4.30

 

ICI

2.50

 

Further research in the late 1990's on comparisons using value added per £ of employee costs was conducted by Dunn and Kent and focused on the supermarket sector. (Financial accountant - IFA journal July/August 1997).

The period under review was 1994 - 1996 and showed:

 

 

94

95

96

Value added per £ of employee costs

 

 

 

 

 

 

Asda

1.69

1.77

1.84

 

Morrisons

1.86

1.87

1.81

 

Safeway

1.84

1.63

1.93

 

Sainsbury

2.05

1.90

1.77

 

Tesco

1.88

1.85

1.88

The 2001 Value Added Scoreboard shows:

 

 

 

 

 

 

Asda (now part of Wal-Mart)

 

 

1.75

 

Morrisons

 

 

1.79

 

Safeway

 

 

1.66

 

Sainsbury

 

 

1.57

 

Tesco

 

 

1.86

 

 

 

 

 

 

Sector

 

 

1.76

Ranking these companies by value added, their position in the top 500 UK companies using this benchmark shows:

(The Value Added Scoreboard 2001)

 

 

 

Value

Added

Ranking in Top 500

List

 

 

£m

 

 

Tesco

3805

19

 

Sainsbury

2836

25

 

Asda (Wal-Mart)

1626

60

 

Safeway

1545

61

 

Morrisons

700

134

In terms of labour productivity, Tesco having performed consistently in the late 90's, now outperforms its competitors using this important benchmark.

The DTI's value added scoreboard has blown fresh air through the use of this concept and its importance as a benchmarking facility. American Professor Adolf Lathoven was once quoted when iting UK published matter on the strengths of value added as "it can help predict results, it allows equity to be assessed as between stakeholders within companies; it is an indicator of the ability to pay wages; and it can be used to evaluate socio-economic performance of companies" which seems to be a sophisticated way of saying reconciling of profit from private industry to national interest.

Page 3 of 4 Go to page 1 2 3 4 >