Profitability in the UK

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Statistical Bulletin

Office for National Statistics | 1

Profitability of UK Companies, Q1

2011

Coverage: UK

Date: 06 July 2011

Geographical Area: UK and GB

Theme: Economy

Profitability of UK Companies 1st Quarter 2011

Private Non-Financial Corporations net rate of return was 12.7 percent.

Manufacturing companies net rate of return was 6.1 percent.

Service companies net rate of return was 14.9 percent.

The net rate of return of companies other than United Kingdom Continental Shelf (UKCS)

companies was 11.3 percent.

The net rate of return of UKCS companies was 47.6 percent.

Profitability of UK Companies 2011Q1

The net rate of return by private non-financial corporations in the first quarter of 2011 was 12.7

percent. This compares with the revised estimate of 12.5 percent in the previous quarter. The

annual net rate of return in 2010 was 11.7 per cent. This compares with the estimate of 11.3 per cent

for 2009.


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Profitability of UK Companies, Q1 2011 | 06 July 2011


SCT Net Rate of Return of PNFCs 2011Q1

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Net Rate of Return

2011Q1

Percent

Total Manufacturing Services UK Continental

Shelf (UKCS)

2009 11.3 7.6 14.2 29.6

2010 11.7 8.3 14.7 39.7

2009Q1 12.3 7.1 14.5 32.6

2009Q2 11.3 6.9 15.3 28.7

2009Q3 10.8 7.2 12.8 24.9

2009Q4 10.9 9.2 14.1 32.2

2010Q1 11.1 5.4 14.0 35.8

2010Q2 11.4 7.7 15.2 37.7

2010Q3 11.8 8.4 14.3 41.0

2010Q4 12.5 11.2 15.2 44.4
http://www.ons.gov.uk/ons/rel/pnfc2/profitability-of-uk-companies/q1-2011/chd-net-ror-pnfcs-2011q1-lrww.xls


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Total Manufacturing Services UK Continental

Shelf (UKCS)

2011Q1 12.7 6.1 14.9 47.6

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2011 User Feedback Survey: Profitability of UK Companies

Take part in our user survey at http://www.surveymonkey.com/s/Z9TRM7C

Manufacturing and Service Companies

Manufacturing Companies

The net rate of return for manufacturing companies in the first quarter of 2011 is estimated at 6.1

percent. This is lower than the 2010 average of 8.3 percent and is the lowest value since the first

quarter of 2010.

Service Companies

The net rate of return for service companies in the first quarter of 2011 is estimated at 14.9 percent.

This is higher than the average for 2010 of 14.7 percent.

SCT Net Rate of Return of Manufacturing (LRYC) and Services (LRYP) Companies 2011Q1
http://www.surveymonkey.com/s/Z9TRM7Chttp://www.ons.gov.uk/ons/rel/pnfc2/profitability-of-uk-companies/q1-2011/prt-net-rate-of-return-2011q1.xls


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Download chart

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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 first quarter of 2011 is

estimated at 11.3 percent.

SCT Net Rate of Return of Non-UKCS Companies 2011Q1 LRXP

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United Kingdom Continental Shelf (UKCS) Companies

The net rate of return for UKCS companies increased in the first quarter of 2011 to 47.6 percent,

compared with the revised estimate of 44.4 percent recorded 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
http://www.ons.gov.uk/ons/rel/pnfc2/profitability-of-uk-companies/q1-2011/chd-net-ror-non-ukcs-2011q1-lrxp.xlshttp://www.ons.gov.uk/ons/rel/pnfc2/profitability-of-uk-companies/q1-2011/chd-net-ror-manf--lryc--nd-svcs--lryp--companies-2011q1.xls


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SCT Net Rate of Return of PNFCs 2011Q1 LRXE

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Background notes

1. Whats new?

New background notes

Following on from our announcement in the last statistical bulletin, ONS has re-formatted the

content and format of the Background notes; it is implemented in this edition.

New Website

The launch of the new ONS website on 28 August 2011 will bring changes to the design and

format of statistical bulletins. The bulletin main body will be in html and pdf format but detailed

data tables will be available as Excel spreadsheets only. The new website will improve the way

users can access our statistics but many existing bookmarks and links will no longer work and

users will need to update them. Find out more at:

http://www.ons.gov.uk/about/what-we-do/programmes---projects/web-development/index.html

Upcoming Changes

Private Non-financial Corporations (PNFCs) branch currently produces the statistical bulletin

and tables in accordance with the 2003 UK Standard Industrial Classification System (SIC03).
http://www.ons.gov.uk/ons/rel/pnfc2/profitability-of-uk-companies/q1-2011/chd-net-ror-pnfcs-2011q1-lrxe.xlshttp://www.ons.gov.uk/about/what-we-do/programmes---projects/web-development/index.htmlhttp://www.ons.gov.uk/ons/rel/pnfc2/profitability-of-uk-companies/q1-2011/chd-net-ror-pnfcs-2011q1-lrxe.xls


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There will be a move over to a system revised for 2007. From the 2011 quarter 2 release in

October 2011, Profitability of UK companies will be classified on a 2007 UK SIC basis (SIC07).

Further information can found at:

www.statistics.gov.uk/statbase/Product.asp?vlnk=14012

In line with the launch of the new website and changes to statistical bulletin formats, a preview

of the proposed new pdf bulletin design is available at:

www.statistics.gov.uk/pdfdir/prof2011Q1.pdf

Comments on the design and content are welcomed via the 2011 User Feedback Survey link

given at the bottom of the front page of this bulletin.

2. Revisions

Table R1 shows the revisions to the net rates of return since the last publication. Revisions have

been made back to 2010 quarter one. These revisions are consistent with the data published in

the latest Quarterly National Accounts Release, published 28 June 2011.

Revisions have been introduced from the following sources:

- New information from the Quarterly Operating Profits Survey.

- New information from the Capital Expenditure Survey.

Estimates for the most recent quarters are provisional and, as usual, are subject to revisionsin the light of updated source information. The non-UKCS profits data from the first quarter of

2009 are derived from the ONS Quarterly Operating Profits Survey, which has a relatively small

sample.

3. Additional information

The underlying profits data used to calculate these rates of return are consistent with the

Quarterly National Accounts First Release, published on 28 June 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 2August 2010, updated with later information where available.

4. 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.

5. 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 currentreplacement 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
http://www.statistics.gov.uk/statbase/Product.asp?vlnk=14012http://www.statistics.gov.uk/pdfdir/prof2011Q1.pdfhttp://www.statistics.gov.uk/statbase/Product.asp?vlnk=14012


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gross rate of return. Rates of return are published for quarters and for years. In the absence of

direct data for capital stock on a quarterly basis, standard statistical techniques have been used

to estimate a quarterly series. The quarterly rates of return are available from the first quarter of

1989. The annual rates of return are available back to 1965 for total PNFCs.

6. The gross operating surplus of PNFCs consists of gross trading profits, plus income from rental

of buildings, less inventory holding gains.

7. 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.

8. Inventory holding gains are the differences in the change in the book value of inventoriesmeasured 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.

9. 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, which was last published on 2 August 2010 :www.statistics.gov.uk/StatBase/

Product.asp?vlnk=10730

10. 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.

11. Further information is contained in the Profitability Summary Quality Report via http://

www.ons.gov.uk/about-statistics/methodology-and-quality/quality/qual-info-economic-social-and-

bus-stats/quality-reports-for-economic-statistics/summary-quality-report-for-profitability-of-uk-

companies.pdf
http://www.ons.gov.uk/about-statistics/methodology-and-quality/quality/qual-info-economic-social-and-bus-stats/quality-reports-for-economic-statistics/summary-quality-report-for-profitability-of-uk-companies.pdfhttp://www.ons.gov.uk/about-statistics/methodology-and-quality/quality/qual-info-economic-social-and-bus-stats/quality-reports-for-economic-statistics/summary-quality-report-for-profitability-of-uk-companies.pdfhttp://www.ons.gov.uk/about-statistics/methodology-and-quality/quality/qual-info-economic-social-and-bus-stats/quality-reports-for-economic-statistics/summary-quality-report-for-profitability-of-uk-companies.pdfhttp://www.ons.gov.uk/about-statistics/methodology-and-quality/quality/qual-info-economic-social-and-bus-stats/quality-reports-for-economic-statistics/summary-quality-report-for-profitability-of-uk-companies.pdfhttp://www.ons.gov.uk/about-statistics/methodology-and-quality/quality/qual-info-economic-social-and-bus-stats/quality-reports-for-economic-statistics/summary-quality-report-for-profitability-of-uk-companies.pdfhttp://www.ons.gov.uk/about-statistics/methodology-and-quality/quality/qual-info-economic-social-and-bus-stats/quality-reports-for-economic-statistics/summary-quality-report-for-profitability-of-uk-companies.pdfhttp://www.ons.gov.uk/about-statistics/methodology-and-quality/quality/qual-info-economic-social-and-bus-stats/quality-reports-for-economic-statistics/summary-quality-report-for-profitability-of-uk-companies.pdfhttp://www.statistics.gov.uk/StatBase/Product.asp?vlnk=10730http://www.statistics.gov.uk/StatBase/Product.asp?vlnk=10730


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12. Details of the policy governing the release of new data are available from the media office. Also

available is a list of the names of those given pre-publication access to the contents of this

release.

13. 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.

14. Copyright and Reproduction

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You may use or re-use this information (not including logos) free of charge in any format or

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To view this licence, go to: http://www.nationalarchives.gov.uk/doc/open-government-licence/ orwrite to: The Information Policy Team, The National Archives, Kew, London TW9 4DU

email: [email protected].

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Relations Office email: [email protected]

Copyright

Crown copyright 2011

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. To view this licence, visit

www.nationalarchives.gov.uk/doc/open-government-licence/ or write to the Information Policy Team,

The National Archives, Kew, London TW9 4DU, or email: [email protected].

This document is also available on our website atwww.ons.gov.uk.

Statistical contacts

Name Phone Department Email

Blackmore Denise +44 (0)1633 456660 Private Non-

Financial

Corporations

[email protected]
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Profitability in the UK