Activity type factsheet 2021/22: Develop and make
Updated 15 March 2022
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This publication is available at https://www.gov.uk/government/publications/2021-contract-profit-rate/activity-type-factsheet-202122-develop-and-make
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 Develop and Make 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.
Develop and make
Companies undertaking comparable activities considered as ‘Develop and Make’ are expected to engage in manufacturing and the design and development contributing to that process. This would therefore not include manufacturing on behalf of a hiring firm that supplies the design, or those solely undertaking research or design work with no associated manufacturing. Where development activities do not seek to result in a novel or differentiated product the company is less likely to be considered comparable.
Profit on cost of production
| 2017/18 | 2018/19 | 2019/20 | 2020/21 | 2021/22 | |
|---|---|---|---|---|---|
| Underlying rate (unadjusted for capital servicing) | 8.00% | 8.70% | 8.78% | 9.67% | 9.28% |
| Capital servicing adjustment | -1.23% | -1.03% | -0.92% | -0.98% | -1.15% |
| Underlying rate | 6.77% | 7.67% | 7.86% | 8.69% | 8.13% |
| Three-year rolling average | 7.39% | 6.65% | 7.43% | 8.07% | 8.23% |
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: 5.51%; 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 | 290 |
|---|---|
| of which profit making | 247 |
| Aggregate turnover | £1,056 |
| Total capital employed (CE) | £272 |
| Average company CP:CE ratio | 3.47 |
Source: Orbis (Cash figures shown in GBP Billions)
Names of companies in the index
| A/S Vestfrost * | Deere & CO | Lockheed Martin Corp | Skako A/S |
| Aaon INC | DEL BO Impianti S.R.L. | Logset Oy | Smith & Wesson Brands, Inc. |
| AB Volvo | Deutz AG | Macpresse Europa S.R.L. | Smith Brothers (Leicester) Limited |
| Advanced Energy Industries INC | Douglas Dynamics, Inc. | Mactaggart Scott (Holdings) Limited | Smiths Group PLC |
| Aerojet Rocketdyne Holdings, Inc. | Dril-Quip INC * | Magna International INC | Spirax-Sarco Engineering PLC |
| Aerovironment, Inc. | Ducommun INC | Makron Oy | Spirit Aerosystems Holdings, Inc. |
| Aertec Solutions SL. | Duerr AG | Manitex International, Inc. * | SPX Corp |
| Airbus SE | Elettronica - Societa PER Azioni | Manitou BF | SPX Flow, Inc. |
| Alamo Group INC | Energy Recovery, Inc. | Manitowoc Company, Inc. (The) | Star Refrigeration Limited |
| Alimak Group AB | Enerpac Tool Group Corp | Marel HF | Steerprop Oy * |
| Allied Motion Technologies, Inc. | Espey Manufacturing & Electronics Corp | Mariani S.R.L. | Sturm Ruger & CO INC |
| Allison Transmission Holdings, Inc. | Eurofighter Jagdflugzeug GmbH | Maschinenfabrik Berthold Hermle AG | Sulzer AG |
| Alstom | Europress Group Oy | MAX Automation SE * | SVI S.P.A. |
| Altra Industrial Motion Corp. | EVS Broadcast Equipment SA | Maxar Technologies Inc. | Swede Ship Marine Aktiebolag * |
| American Axle & Manufacturing Holdings, Inc. * | Faro Technologies INC * | Mccoy Global Inc. | Systemair AB |
| Ametek INC | Fedegari Autoclavi - S.P.A. | Meggitt PLC | Tacchi Giacomo E Figli S.P.A. * |
| Amtech Systems INC | Federal Signal Corp | Mercury Systems INC | Talgo,S.A. |
| Aptiv PLC | Filtronic PLC * | Mikron Holding AG | Talleres Daumar SL |
| Astec Industries INC | Flir Systems INC | Miller Industries INC | Taylor Devices INC |
| Astronics Corporation | Flowserve Corp | Mino S.P.A. | Teagle Holdings Limited |
| Astronova, Inc. | Fratelli Mazzocchia S.P.A. * | MKS Instruments INC | Teledyne Technologies Incorporated |
| Atlas Copco AB | Freightcar America, Inc. * | Modine Manufacturing CO | Tennant CO |
| ATS Automation Tooling Systems INC | Frigoveneta S.P.A. | Moog INC | Tenneco Inc. |
| Autoliv, Inc. | G.H.B. (Holding) Limited | Morgan Advanced Materials PLC | Teradyne INC |
| Avant Tecno Oy | Genasys Inc. | Motorola Solutions, Inc. | Terex Corp |
| Axcelis Technologies INC | Gencor Industries, Inc. | Mpac Group PLC | Tesmec SPA |
| Axon Enterprise, Inc. * | General Dynamics Corp | MS International PLC | Textron INC |
| Azkoyen SA | General Electric Company | MTS Systems Corp | Thales |
| BAE Systems PLC | Gentex Corp | National Oilwell Varco, Inc. * | THE Shyft Group, Inc. |
| Barco NV | Gesellschaft fuer Oeltechnik mit beschraenkter Haftung | Navistar International Corp | Thwaites Limited |
| Barnes Group INC | Glunz & Jensen Holding A/S * | NC Engineering (Hamiltonsbawn) Limited | Thyssenkrupp AG * |
| Bevan Group LTD | Gorman-Rupp Company (The) | Nicolas Correa S.A. | Tomra Systems ASA |
| Bittium OYJ | Graco INC | Nordson Corp | Tornos Holding S.A |
| BK Technologies INC * | Graham Corp | Northrop Grumman Corporation | Trakm8 Holdings PLC * |
| Blonder Tongue Laboratories INC * | Gray & Adams (Doncaster) Limited | Novanta INC | Trane Technologies PLC |
| Boeing Company (The) | Greenbrier Companies, Inc. (The) | Nuova Idropress - Societa’ PER Azioni IN Forma Abbreviata NIP S.P.A. | Transdigm Group Incorporated |
| Boston Scientific Corp | Grovgaarden AS | Officine Bieffebi S.P.A. | Trinity Industries INC |
| Brieda E C. - S.R.L. | Gulf Island Fabrication INC * | Omav S.P.A. | Triumph Group INC |
| Broadwind, Inc. * | Havyard Group ASA * | Onto Innovation Inc. * | Tronrud Engineering AS * |
| Bruker Corporation | Heico Corp | Oshkosh Corporation | Twin Disc INC |
| Brunvoll Holding AS | Heidelberger Druckmaschinen AG * | Oxford Instruments PLC | Ultra Electronics Holdings PLC |
| BWX Technologies Inc. | Heroux-Devtek INC * | P P S Commercials Limited | Univer S.P.A. * |
| C.M.A. S.P.A. | Hexcel Corp | Paccar INC | Vaisala OYJ |
| C.S.C. - S.P.A. | Honeywell International INC | Park Aerospace Corp. | Varian Medical Systems INC |
| Caci International INC | Huntington Ingalls Industries, Inc. | Paul Mueller Company | VEO Oy |
| Calf S.P.A. | Idex Corp | PC TEL INC | Wabash National Corp |
| Calpeda S.P.A. | Ii-Vi INC | Perceptron INC * | Wacker Neuson SE |
| Caprari S.P.A. | Imer International SPA | Petards Group PLC * | Wartsila OYJ |
| Caterpillar INC | Inficon Holding AG | Pietro Fiorentini S.P.A. | Washtec AG |
| Ceco Environmental Corp. | Ingenieria Y Tecnicas de Montajes Lointek SL | Ponsse OYJ | Waters Corp |
| Ceotronics AG | Innovative Solutions & Support INC | Portsmouth Aviation Holdings Limited * | Welbilt INC |
| Chart Industries INC | Interroll Holding AG | Powell Industries INC | William Cook Holdings Limited (J) |
| Chemring Group PLC | Intevac INC | Prima Industrie SPA | Wilton Universal Group Limited * |
| CMZ Machine Tool Manufacturer Sociedad Limitada. | Intricon Corporation * | Qinetiq Group PLC | Wireless Telecom Group INC * |
| CNH Industrial N.V | Istobal SA | Radley Engineering Limited | Witt & SON UK Holdings Limited |
| Cognex Corp | Italcab S.P.A. | Raute OYJ | Woodward, Inc. |
| Coherent INC | John Bean Technologies Corp | Raytheon Technologies Corporation | Worthington Industries INC |
| Cohort PLC | Judges Scientific PLC | Renishaw PLC | Xylem Inc. |
| Cohu INC * | Kadant INC | Rheinmetall AG | Zambello Riduttori 2 - S.R.L. |
| Columbus Mckinnon Corp | Kaman Corp | Ricardo PLC | Zebra Technologies Corp |
| Comerio Ercole S.P.A. | Katsa Oy | Robor SRL | |
| Commercial Vehicle Group, Inc. | Kesla OYJ | Rockwell Automation, Inc. | |
| Comtech Telecommunications Corp | Keysight Technologies, Inc. | Rohde & Schwarz GmbH & Co. Kommanditgesellschaft | |
| Construcciones Y Auxiliar de Ferrocarriles, S.A. | KMG Systems Limited | Rolls-Royce Holdings PLC * | |
| Continental AG * | Koenig UND Bauer AG | Roper Technologies, Inc. | |
| Cormach S.R.L. | Komax Holding AG | Saab AB | |
| Costar Technologies, Inc. * | Konecranes OYJ | Saalasti Oy * | |
| CTA International SAS | Kongsberg Gruppen ASA (J) | Safran | |
| CTT Systems AB | Kratos Defense & Security Solutions, Inc. | Samp S.P.A. | |
| Cubic Corp | Krohne Italia SRL * | Sandvik AB | |
| Cummins Inc. | KVH Industries INC * | Schaltbau Holding AG | |
| Curtiss Wright Corp | L3harris Technologies, Inc. | Schlatter Industries AG | |
| CVD Equipment Corporation * | LAM Research Corp | Schmitt - Elevadores, LDA | |
| Cyberoptics Corp | Lecitrailer SA | SCM Group S.P.A. | |
| Dalmec S.P.A. | Leonardo - Finmeccanica S.P.A. | Sheffield Forgemasters International Limited | |
| Dana Incorporated | Lillbacka Powerco Oy * | Siemens AG | |
| Data I/O Corp * | Linamar Corporation |
‘*’ 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 group last year but has been added this year.