Skip to content

Statistical bulletin: Profitability of UK Companies, Q3 2011 This product is designated as National Statistics

Released: 04 January 2012 Download PDF

Key points

  • Private non-financial corporations net rate of return was 12.9 per cent, which is the highest value since Q3 2008 when it was 13.5 per cent.
  • Manufacturing companies’ net rate of return was 5.0 per cent, which is the lowest value since the SIC2007 series began in Q1 1997.
  • Service companies’ net rate of return was 15.9 per cent, which is the highest value since Q4 2008 when it was 16.1 per cent.
  • United Kingdom Continental Shelf (UKCS) companies net rate of return was 60.5 per cent, which is down on the previous quarter value of 62.9 per cent.
  • Companies other than (UKCS) net rate of return was 11.1 per cent, which is a little higher than the 10.9 per cent recorded in the previous quarter.

Summary

The net rate of return by private non-financial corporations in the third quarter of 2011 was 12.9 per cent. This compares with the revised estimate of 12.8 perc ent in the previous quarter. The annual net rate of return in 2010 was 11.5 per cent. This compares with the estimate of 11.3 per cent for 2009.

SCT Net Rate of Return of PNFCs 2011Q3

SCT Net ROR PNFCs 2011Q3

Download chart

Net Rate of Return

2011 Q3

 
Per cent
Total Manufacturing Services UK Continental Shelf (UKCS)
2009 11.3 7.6 14.2 30.6
2010 11.5 8.3 14.7 54.3
         
2009 Q1 12.5 7.1 14.5 30.5
2009 Q2 11.1 6.9 15.3 20.2
2009 Q3 10.6 7.3 12.8 27.3
2009 Q4 11.0 9.3 14.1 44.6
2010 Q1 10.9 5.5 14.1 48.8
2010 Q2 11.2 7.7 15.2 51.5
2010 Q3 11.9 8.4 14.3 56.9
2010 Q4 11.9 11.6 15.1 60.1
2011 Q1 12.5 6.1 14.8 63.3
2011 Q2 12.8 6.0 15.0 62.9
2011 Q3 12.9 5.0 15.9 60.5

Download table

 

Manufacturing and Service Companies

Manufacturing Companies

The net rate of return for manufacturing companies in the third quarter of 2011 is estimated at 5.0 per cent. This is lower than the 2010 average of 8.3 per cent and is the lowest value since the SIC2007 series began (Q1 1997).

Service Companies

The net rate of return for service companies in the third quarter of 2011 is estimated at 15.9 per cent. This is higher than the average for 2010 of 14.7 per cent and is the highest value since Q4 2008.

SCT Net Rate of Return of Manufacturing (LRYC) and Services (LRYP) Companies 2011Q3

SCT Net ROR Manf (LRYC) and SVCS (LRYP) 2011Q3

Download chart

Non-United Kingdom Continental Shelf (non-UKCS) Companies

Non-UKCS companies comprise manufacturing, service and other companies (such as construction and power supply). The net rate of return for non-UKCS companies in the third quarter of 2011 is estimated at 11.1 per cent.

 

SCT Net Rate of Return of Non-UKCS Companies 2011Q3 LRXP

SCT Net ROR Non-UKCS 2011Q3 LRXP

Download chart

United Kingdom Continental Shelf (UKCS) Companies

The net rate of return for UKCS companies decreased in Q3 2011 to 60.5 per cent, compared with 62.9 per cent in the previous quarter. The rates of return for this industry broadly follow movements in oil and gas prices.

Due to the nature of the capital assets employed, net rates of return for Continental Shelf companies are not directly comparable to those for other industries.

SCT Net Rate of Return of PNFCs 2011Q3 LRXE

SCT Net ROR PNFCs 2011Q3 LRXE

Download chart

Background notes

  1. What’s new?

    Estimates for UK Continental Shelf (UKCS) and non-UK Continental Shelf (non-UKCS) private non-financial companies (PNFCs) are included in this release. They were not available in the last release on 7 October 2011 due to the delay in Sector and Financial Accounts.

    SIC 2007 estimates for capital employed and capital consumption are not available at the time of this release. Provisional estimates shown in this release have been produced using the assumption that the classification change will affect capital in a similar way to Gross Operating Surplus. The next release of 'Capital Stocks and Capital Consumption' in March 2012 will incorporate the new classification and subsequently be used in the Profitability of UK companies 2011 Q4 release.

    Recent Changes

    Profitability of UK companies is now classified on a 2007 UK SIC basis (SIC07).

  2. Revisions

    Table R1 shows the revisions to the net rates of return. For UKCS and non-UKCS PNFCs, where estimates were not available for the last release on 7 October 2011, revisions have been made back to 1997 quarter one and have been introduced from the following sources:

    • New information from the Quarterly Operating Profits Survey,

    • New Information from the Capital Expenditure Survey,

    • Benchmarking to HMRC trading profits estimates,

    • Changes to component totals and industry breakdown resulting from Blue Book 2011 GDP balancing process and SIC07 reclassification. 

  3. For all other estimates, revisions have been made back to Q1 2010. These revisions are consistent with the data published in the latest Quarterly National Accounts Release, published 22 December 2011. Revisions have been introduced from the new information from the Quarterly Operating Profits Survey.

  4. Estimates for the most recent quarters are provisional and, as usual, are subject to revisions in the light of updated source information consistent with National Accounts revisions policy.  ONS has a webpage dedicated to revisions to economic statistics which brings together ONS work on revisions analysis, linking to articles, revisions policies and key documentation from the Statistics Commission's report on revisions.

  5. Additional information

    The underlying profits data used to calculate these rates of return are consistent with the Quarterly National Accounts First Release, published on 22 December 2011. The underlying capital stock data used to calculate these rates of return are based upon the data published in the 'Capital Stocks, Capital Consumption and Non-Financial Balance Sheets' publication on 2 August 2010, updated with later information where available.

  6. Private non-financial corporations (PNFCs) are comprised of UKCS, manufacturing, non-financial service sector companies and others (including construction, electricity and gas supply, agriculture, mining and quarrying). United Kingdom Continental Shelf (UKCS) companies are defined as those involved in the exploration for, and extraction of, oil and natural gas in the UK.

  7. The rates of return presented are ratios of operating surpluses compared to capital employed, expressed as percentages. The ratios measure the ‘accounting’ rates of return achieved in a particular year against total capital employed. The rates of return are on the basis of current replacement cost and relate to United Kingdom operations of PNFCs. The net rate of return uses capital estimates which are net of capital consumption, and is more widely used than the gross rate of return. Rates of return are published for quarters and for years.

  8. The gross operating surplus of PNFCs consists of gross trading profits, plus income from rental of buildings, less inventory holding gains.

  9. Gross trading profits include only that part of a company's income arising from trading activities in the UK. It does not include income from investments or other means, such as earnings from abroad. Gross trading profits are calculated before payments of dividends, interest and tax. The gross trading profits figures used in the calculation of gross operating surplus exclude the quarterly alignment adjustments applied to non-UKCS companies’ gross trading profits, as published in the Quarterly National Accounts.

  10. Inventory holding gains are the differences in the change in the book value of inventories measured at replacement cost and historic cost. The holding gain is subtracted from profits because revaluations are not considered to be part of economic activity, as defined for National Accounts purposes.

  11. SIC 2007 estimates for capital employed and capital consumption are not available at the time of this release.  Provisional estimates shown in this release have been produced using the assumption that the classification change will affect capital in a similar way to Gross Operating Surplus.  The next release of ‘Capital Stocks and Capital Consumption’ in March 2012 will incorporate the new classification and subsequently be used in Profitability of UK companies Q4 2011 release.

  12. Estimates of gross capital stock are a measure of the cost of replacing all produced capital assets held at a particular point in time. Capital employed is the value of fixed assets, plus the value of inventories. It measures the value at replacement cost of all fixed assets at the end of a calendar year. This includes all tangible assets and intangible assets which have been produced and are themselves repeatedly or continuously used in the processes of production for more than a year. Tangible assets include buildings, plant and machinery. Intangible assets include computer software and mineral exploration costs. For UKCS companies, capital employed includes mineral exploration costs and oil rigs, but not the oil and gas reserves that are classified as non-produced assets. Inventories include raw material and fuel that are used up in production. Book values are used for levels of inventories. Estimates of capital stock and capital consumption are produced using the Perpetual Inventory Method. Further details are available in the ‘ Capital Stocks, Capital Consumption and Non-Financial Balance Sheets’ publication (207 Kb Pdf) , which was last published on 2 August 2010. 

  13. In the calculations for net rates of return, estimates of net operating surplus are net of capital consumption (depreciation). Capital consumption is derived from capital stock and covers the depreciation of fixed assets over their service lives. Estimates of net capital are net of accumulated capital consumption; that is, they are a measure of the written down replacement costs of fixed assets.

  14. Further information is contained in the Profitability Summary Quality Report (118.8 Kb Pdf) .

  15. Details of the policy governing the release of new data are available from the media relations office. Also available is a list of those given pre-publication access (37.6 Kb Pdf) to the contents of this release.

  16. National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.

  17. Copyright and Reproduction

    © Crown copyright 2012.

    You may use or re-use this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence, or write to: The Information Policy Team, The National Archives, Kew, London TW9 4DU, Email: psi@nationalarchives.gsi.gov.uk.

  18. Follow us on Twitter and Facebook or watch our podcasts on YouTube.

  19. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

Statistical contacts

Name Phone Department Email
Denise Blackmore +44 (0)1633 456660 Private Non-Financial Corporations profitability@ons.gsi.gov.uk
Get all the tables for this publication in the data section of this publication .
Content from the Office for National Statistics.
© Crown Copyright applies unless otherwise stated.