Activity type factsheet 2021/22: Ancillary services
Updated 15 March 2022
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Under the Defence Reform Act 2014, the SSRO must provide the Secretary of State with its assessment of the appropriate rates used to determine the contract profit rate for pricing qualifying defence contracts and qualifying sub-contracts. Part of the methodology is the categorisation of comparator companies in to four activity types.
- Develop and Make
- Provide and Maintain
- Ancillary Services
- Construction
The results of these groups are separately analysed and this fact sheet describes the Ancillary Services group. The baseline profit rate combines results from “Develop and Make” and “Provide and Maintain”, as set out in the Recommendation Factsheet. For further information on the methodology used to calculate these rates please see the Single Source baseline profit rate, capital servicing rates and funding adjustment methodology.
Ancillary services
Companies undertaking comparable activities considered as ‘ancillary services’ are expected to deliver either one of administrative, facilities or IT support activities. Companies undertaking these support services are not expected to bear any significant risks other than that of failing to provide the contracted outputs. This captures risk in relation to the delivery of the services, contract risk, procurement risk, staff risk and some quality control risk in respect of these activities.
Profit on cost of production
| 2017/18 | 2018/19 | 2019/20 | 2020/21 | 2021/22 | |
|---|---|---|---|---|---|
| Underlying rate (unadjusted for capital servicing) | 4.31% | 4.49% | 5.86% | 4.19% | 5.86% |
| Capital servicing adjustment | -0.36% | -0.14% | -0.32% | -0.37% | -0.63% |
| Underlying rate | 3.95% | 4.35% | 5.54% | 3.82% | 5.23% |
| Three-year rolling average | 6.11% | 4.27% | 4.61% | 4.57% | 4.86% |
Note: The capital servicing adjustment accounts, at an aggregate level, for different levels of capital employed across the companies in the index and so sets a baseline upon which step 6 of the contract profit rate applies.
The pre-2017/18 underlying rates used for the three-year average were: 2016/17: 4.50%; 2015/16 (calculated using the Review Board’s methodology): 9.88%.
Data sources
For further information on the data selection approach please see section 7 of the Single Source baseline profit rate, capital servicing rates and funding adjustment methodology. A company update search of the Orbis database was carried out on 5 November 2020 on data update number 202001 using software version 202. The financial data for the calculation was extracted from Orbis at the same time.
Median capital servicing adjusted return on cost of production
Proportion of Companies by country
Proportion of companies with defence keyword
Supplementary statistics
| Number of companies | 38 |
|---|---|
| of which profit making | 35 |
| Aggregate turnover | £106 |
| Total capital employed (CE) | £0.37 |
| Average company CP:CE ratio | 258.53 |
Source: Orbis (Cash figures shown in GBP Billions)
Names of companies in the index
| ABM Industries INC | DOC Cleaning Limited | Paychex INC |
| Aramark | Elior Group | prego services GmbH |
| Atlas FM Limited | Endurance International Group Holdings, Inc. | Puligest S.R.L. |
| Automatic Data Processing INC | Firstservice Corporation * | Rentokil Initial PLC |
| AUX Nettoyeurs Encaustiqueurs Reunis | Fiserv INC | Restore PLC |
| Bilby PLC | Healthcare Services Group INC | Serco Group PLC |
| Blueglade Limited | ISS A/S | Softcat PLC (J) |
| Bulloughs Cleaning Services Limited | Lacera Servicios Y Mantenimiento SA | Sykes Enterprises INC |
| City Facilities Management Holdings Limited | Limpieza Y Mantenimiento Impacto Sociedad Limitada | Trinet Group, Inc. |
| Cliner SA | Mears Group PLC * | Tyler Technologies INC |
| Compass Group PLC | Mitie Group PLC | |
| Conduent Incorporated * | Netapp, Inc. | |
| Coor Service Management Holding AB | O.C.S. Group Limited | |
| CSG Systems International INC | OCO Limited |
‘*’ Indicates that the company is a loss-maker in the year. The data for loss-makers are not included in the 2021/22 assessment, but the companies will be taken forward for consideration next year.
(J) Indicates a company which was not in the activity group last year, but had been added this year.