Barclays 2004 Annual Report Download - page 242

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Reconciliation of economic profit
Reconciliation of economic profit
Economic profit for 2004 was £1.9bn. The cumulative total of £5.3bn was generated for the preceding goal period, 2000-2003.
For the new goal period cycle, 2004-2007, the first year of the new goal cycle generated economic profit of £1.9bn.
The 2000-2004 breakdown of economic profit performance is shown below and its reconciliation to profit after tax and minority interests.
2004 2003 2002 2001 2000
£m £m £m £m £m
Profit after tax and minority interests 3,268 2,744 2,230 2,446 2,445
Goodwill amortisation 299 265 254 229 51
Tax credit on goodwill (11) (7) (5) (5) –
Goodwill relating to associated undertakings 771––
Goodwill on disposals ––10––
Profit after tax and minority interests excluding goodwill amortisation 3,563 3,009 2,490 2,670 2,496
Gain/(loss) on disposal recognised in the statement
of total recognised gains and losses 13 (4) 206 – –
3,576 3,005 2,696 2,670 2,496
Average shareholders’ funds including average historical goodwill 18,237 17,019 15,800 14,514 10,117
Post-tax cost of equity 9.5% 9.5% 9.5% 10.5% 11.0%
Cost of average shareholders’ funds including average historical goodwill (1,691) (1,575) (1,458) (1,441) (1,094)
Economic profit 1,885 1,430 1,238 1,229 1,402
The difference between the average shareholders’ funds (excluding minority interests) and that reported above represents cumulative goodwill
amortisation charged and goodwill previously written off to reserves.
The cost of average shareholders’ funds includes a charge for purchased goodwill. A post-tax cost of equity of 8.5% has been used for goodwill
associated with the acquisition of Woolwich plc. A post-tax cost of equity of 9.5% (2003: 9.5%, 2002: 9.5%, 2001: 10.5%) has been used for all
other goodwill.