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. For further information on the methodology used to calculate these rates please see the Single Source baseline profit rate and capital servicing rates methodology.
Baseline profit rate
The baseline profit rate is step 1 of the four-step process for determining the contract profit rate for a qualifying defence contract.
The baseline profit rate is calculated from an index of public and private companies. The underlying rate is the median capital servicing adjusted profit on cost of production of the group. The baseline profit rate is the rolling average of the underlying rate.
| 2022/23[1],[2] | 2023/24 | 2024/25 | 2025/26 | 2026/27 | |
| Underlying rate (unadjusted for capital servicing)[3] | 8.24% | 9.50% | 9.31% | 10.60% | 11.68% |
| Capital servicing adjustment | -0.89% | -1.06% | -1.22% | -1.46% | -1.61% |
| Underlying rate | 7.35% | 8.44% | 8.09% | 9.14% | 10.07% |
| Baseline profit rate recommended by the SSRO; rolling average of the underlying rate[4] | 8.07% | 8.29% | 8.24% | 8.56% | 9.10% |
[1] The 2022/23 to 2024/25 rates are based on the composites of the ‘Develop and Make’ and ‘Provide and Maintain’ activity groups; while the 2025/26 rates onwards are calculated from the ‘Develop, Make and Support’ activity group. The 2026/27 baseline profit rate assessment is calculated as a three-year average of the FY2024^ and FY2023 ‘Develop, Make and Support’ underlying rates, and the historical FY2022 composite underlying rate.
[2] Shown are the 2022/23 rates recommended by the SSRO. The Secretary of State determined the BPR for 2022/23 as an average of the composite underlying rates calculated by the SSRO for the three years prior to 2021 (8.50%, 8.23%, and 8.19%), keeping the BPR at 8.31 per cent.
[3] 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 4 of the contract profit rate applies.
[4] A four-year average was used for 2022/23; a three-year average for pre-2022/23 and a three-year average (excluding the 2022/23 underlying rate) for 2023/24 onwards. The pre-2022/23 underlying rates used for the three-year average were: 2020/21: 8.23%, 2021/22: 8.19%.
^ FY2024 means the latest year ending on or before 31 March 2025 that is addressed by the financial statements of each comparator company. For most comparator companies this is the year ended 31 December 2024, but some company financial statements cover different time periods, for example the year ended 31 March 2025, or the year ended 30 June 2024.
Median capital servicing adjusted return on cost of production
Baseline profit rate activity types
The underlying rate for 2025/26 onwards is calculated using companies in the ‘Develop, Make & Support’ activity group. Companies undertaking comparable activities considered as ‘Develop, Make & Support’ are expected to engage in manufacturing and the design; and development contributing to that process and delivery of services to ensure the availability of an asset through repair and servicing to third party equipment. 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.
Data sources
For further information on the data selection approach see section 7 of the Single Source baseline profit rate and capital servicing rates methodology. A company update search of the Orbis database was carried out on 3 November 2025 on data update number 369001 using software version 369. The financial data for the calculation was extracted from Orbis at the same time.
Proportion of companies by country
Proportion of companies with defence keyword
Supplementary statistics
| Number of companies | 365 |
| of which profit making | 317 |
| Aggregate turnover (£billions) | 1,292.5 |
| Total capital employed (CE) (£billions) | 303.9 |
| Average company CP:CE ratio | 3.69 |
Source: Orbis (Cash figures shown in rounded GBP Billions)
Names of companies in the index
| 2G Energy AG (J) |
| A. Water Systems S.R.L. (J) |
| Aaon INC |
| AAR Corp. |
| Ab Solving Oy (J) |
| AB Volvo |
| ABB LTD (J) |
| Accuracy International Limited |
| ACMA, Gesellschaft fuer flugzeuggestuetzte Trage- und Startanlagen mit beschraenkter Haftung (J) |
| Aehr Test Systems (J) |
| Aerovironment, Inc. |
| AES Aerospace Embedded Solutions GmbH * (J) |
| AG Growth International Inc. (J) |
| Agco Corporation (J) |
| Aguirre Maquinaria Agricola SL. |
| AIR Industries Group * |
| Airbus SE |
| Airtanker Holdings Limited |
| Airtanker Services Limited |
| Airtificial Intelligence Structures, S.A. (J) |
| Aixtron SE (J) |
| Alamo Group Inc. |
| Alexanderwerk AG (J) |
| Alimak Group AB |
| Allient INC |
| Allison Transmission Holdings, Inc. |
| Alstom S.A |
| American Axle & Manufacturing Holdings, Inc. |
| Ametek, Inc. |
| Amtech Systems INC * |
| Analog Devices INC |
| Andritz AG |
| Applied Materials INC (J) |
| Arlington Fleet Group Limited (J) |
| Art’s WAY Manufacturing CO INC * (J) |
| Asml Holding N.V. (J) |
| Astec Industries INC |
| Astronics Corporation |
| Astronova, Inc. * |
| Atlas Copco AB |
| ATS Corporation * |
| Aumann AG |
| Avant Tecno Oy |
| Aviat Networks, Inc. (J) |
| Axcelis Technologies INC |
| Axon Enterprise, Inc. |
| Azkoyen SA |
| Babcock & Wilcox Enterprises, Inc. |
| Babcock International Group PLC |
| BAE Systems PLC |
| Bailey Trailers Limited |
| Baltur Societa’ PER Azioni (J) |
| Barco NV |
| Benchmark Electronics, Inc. (J) |
| Binder + Co AG |
| Bittium OYJ |
| Bizerba SE & Co.KG (J) |
| BK Technologies Corporation |
| Blue Bird Corporation |
| BMH Technology Oy (J) |
| BMI Trailers Limited * |
| Bombardier INC (J) |
| Bombas Ideal Sociedad Anonima (J) |
| Broadwind, Inc. |
| Bruker Corporation |
| Brunswick Corporation (J) |
| Brunvoll Holding AS |
| Bucher Industries AG (J) |
| Butler National Corp. (J) |
| BWX Technologies, Inc. |
| C.M.A. – Costruzioni Montacarichi ED Ascensori – Societa’ A Responsabilita’ Limitata |
| C.M.A. S.P.A. (J) |
| Cactus, Inc. |
| CAE Aircrew Training Services PLC (J) |
| CAE INC |
| Cassioli S.R.L. (J) |
| Caterpillar Inc. |
| Ceco Environmental Corp. |
| Ceotronics AG (J) |
| Chart Industries, Inc. |
| Chemring Group PLC |
| Clade Engineering Systems Group LTD (J) |
| CMZ Machine Tool Manufacturer Sociedad Limitada. |
| CNH Industrial N.V |
| Coda Octopus Group, Inc. |
| Cofidur SA (J) |
| Cognex Corporation |
| Coherent Corp |
| Cohort PLC |
| Columbus Mckinnon Corp |
| Commercial Vehicle Group, Inc. * |
| Comtech Telecommunications Corp. * |
| Conit S.R.L. (J) |
| Construcciones Y Auxiliar de Ferrocarriles, S.A. |
| Continental AG |
| Cos.Eco. Industrie Group S.R.L. (J) |
| CPI Aerostructures INC |
| CTA International SAS |
| CTT Systems AB |
| Cummins Inc. |
| Curtiss-Wright Corporation |
| Dalmec S.P.A. (J) |
| Data I/O Corp * |
| David Ritchie (Implements) Limited |
| de Angelis S.P.A. (J) |
| de Lorenzo S.P.A. |
| Deere & Company |
| DEL BO Impianti S.R.L. (J) |
| DEL Morino – S.R.L. (J) |
| Deutz AG |
| DON Whitley Scientific Limited (J) |
| Douglas Dynamics, Inc. |
| Dril-Quip, Inc. |
| Ducommun Incorporated |
| Duerr AG |
| Effebi S.P.A. (J) |
| Electrolux Professional AB (Publ) (J) |
| Elettronica – Societa PER Azioni * |
| Emergency ONE Group Limited (J) |
| Enerflex Ltd. (J) |
| Energy Recovery, Inc. |
| Enerpac Tool Group Corp. |
| Errelle S.R.L. (J) |
| Espey MFG and Electronics Corp |
| Euromids (J) |
| Europress Group Oy (J) |
| Evertz Technologies Limited (J) |
| EVS Broadcast Equipment SA |
| Exail Technologies SA (J) |
| Facma S.R.L. (J) |
| Fast Holdings Limited (J) |
| Fava Societa’ PER Azioni * (J) |
| Federal Signal Corporation |
| Ficep S.P.A. (J) |
| Filtronic PLC |
| Fimic SRL (J) |
| Firan Technology Group Corporation (J) |
| First Solar, Inc. (J) |
| Fisher (James) & Sons PLC |
| Fiskerstrand Holding AS * (J) |
| Flowplus Oy (J) |
| Flowserve Corp |
| FormFactor, Inc. (J) |
| Forum Energy Technologies, Inc. * |
| Franklin Electric Co., Inc. (J) |
| Fratelli Mazzocchia S.P.A. (J) |
| Frequency Electronics INC (J) |
| G. Bezzera S.R.L. * (J) |
| G.H.B. (Holding) Limited |
| G.T. Bunning & Sons Limited (J) |
| Gamma Meccanica S.P.A. * (J) |
| GAS and Heat S.P.A. (J) |
| Genasys Inc. * |
| Gencor Industries, Inc. |
| General Dynamics Corporation |
| General Electric Company |
| Gentex Corp |
| Gorman-Rupp Company (The) |
| Graco Inc. |
| Graham Corp |
| Grupo Amper SA (J) |
| Guzzetti S.P.A. * |
| Heico Corporation |
| Heidelberger Druckmaschinen AG |
| Hensoldt AG (J) |
| Hexcel Corporation |
| Hiden Instruments Limited |
| Hillenbrand, Inc. (J) |
| HMR Group AS * (J) |
| HMS Networks AB (J) |
| Honeywell International INC |
| Huntington Ingalls Industries, Inc. |
| I P Huse AS (J) |
| Icoel S.R.L. * (J) |
| Idex Corp |
| Imer International SPA (J) |
| IMI PLC |
| Industrial de Transformados Metalicos SA (J) |
| Industrias Montanesas Electricas Mecanicas SL |
| Inficon Holding AG |
| Ingersoll Rand Inc. |
| Ingeteam SA (J) |
| Innovative Solutions & Support INC |
| Interpump Group S.P.A. (J) |
| Interroll Holding AG |
| Intest Corporation (J) |
| IPG Photonics Corporation * |
| Istobal SA |
| Italcab S.P.A. * |
| ITT Inc. (J) |
| Iveco Group NV (J) |
| Jacobs Solutions Inc. |
| JBT Marel Corp |
| Johnson Controls International PLC |
| Judges Scientific PLC |
| Kadant Inc. |
| Kbr, Inc. |
| Kesla OYJ * |
| Kinetrol Limited (J) |
| KLA Corporation (J) |
| Koenig UND Bauer AG * |
| Komax Holding AG * |
| Konecranes OYJ |
| Kongsberg Gruppen ASA (J) |
| Kratos Defense & Security Solutions, Inc. |
| L3harris Technologies, Inc. |
| LAM Research Corporation |
| Leonardo S.P.A. |
| Lightpath Technologies INC * (J) |
| Lillbacka Powerco Oy * |
| Linamar Corporation |
| Lincoln Electric Holdings, Inc. (J) |
| Lockheed Martin Corporation |
| Lombardi Converting Machinery S.P.A. |
| LPA Group PLC * (J) |
| Lpkf Laser & Electronics SE * (J) |
| Magna International INC |
| Maicopresse S.P.A. (J) |
| Manitou BF |
| Marshall of Cambridge (Holdings) Limited * |
| Maschinenfabrik Berthold Hermle AG |
| Melrose Industries PLC * (J) |
| Menci & C. S.P.A. (J) |
| Mercury Systems INC * |
| METZEN Industries GmbH (J) |
| MID Kent Electrical Engineering Company Limited (J) |
| Miller Industries INC |
| Mind Technology INC (J) |
| Mino S.P.A. (J) |
| MKS INC |
| Modine Manufacturing Company |
| Moog Inc. |
| Motorola Solutions, Inc. |
| Mpac Group PLC |
| MS International PLC |
| MSA Safety Incorporated (J) |
| M-Tron Industries INC (J) |
| MTU Aero Engines AG |
| Nammo AS |
| NC Engineering (Hamiltonsbawn) Limited |
| NEW Lachaussee (J) |
| NFI Group Inc. |
| Nicolas Correa S.A. (J) |
| Nordson Corporation |
| Northrop Grumman Corporation |
| NOV INC |
| Nuova Idropress – Societa’ PER Azioni IN Forma Abbreviata NIP S.P.A. |
| Nuova Stame S.P.A. (J) |
| NVE Corporation |
| Oceaneering International INC (J) |
| Officina Bocedi SRL |
| Officina Meccanica F.Lli Tabarelli S.P.A. |
| Officine Meccaniche Aeronautiche S.P.A. (IN Sigla O.M.A. S.P.A.) * (J) |
| Officine Meccaniche Galletti (O.M.G.) S.R.L. * (J) |
| Officine Meccaniche S.R.L. DI Ponte Nossa (J) |
| OMA Holding Stord AS (J) |
| Onto Innovation, Inc. |
| Optex Systems Holdings, Inc. (J) |
| Orbit International Corp * (J) |
| Orion SRL (J) |
| Oshkosh Corporation |
| OSI Systems, Inc. (J) |
| Oxford Instruments PLC |
| Oy El-Ho Ab * |
| P.F.M. S.P.A. (J) |
| Paccar INC |
| Paglierani S.R.L. (J) |
| Park Aerospace Corp. |
| Paul Mueller Company |
| Podium Engineering S.R.L. (J) |
| Poettinger Landtechnik GmbH * (J) |
| Ponsse OYJ |
| Powell Industries, Inc. |
| PVA Tepla AG |
| Qinetiq Group PLC * |
| R.J. Bateman (Engineering) Limited (J) |
| Raute OYJ |
| Regal Rexnord Corporation (J) |
| Renew Holdings PLC |
| Renishaw PLC |
| REV Group, Inc. |
| Rheinmetall AG |
| Rieter Holding AG (J) |
| Robson Handling Technology Limited |
| Roccheggiani S.P.A. (J) |
| Rockwell Automation, Inc. |
| Rohde & Schwarz GmbH & Co. Kommanditgesellschaft |
| Rolls-Royce Holdings PLC |
| RTX Corporation |
| RWG (Repair & Overhauls) Limited |
| S.T.M. – Societa’ PER Azioni (J) |
| Saab AB |
| Saalasti Oy * |
| Saer Elettropompe S.P.A. (J) |
| Safran |
| SC Group-Global Limited |
| Schlatter Industries AG |
| Schmitt – Elevadores, LDA |
| SDI Group PLC (J) |
| Sermac S.R.L. * (J) |
| Sicamb – S.P.A. (J) |
| Siemens AG |
| Sigicom AB (J) |
| Simic S.P.A. (J) |
| Skako A/S |
| Sletta AS * (J) |
| Smigroup S.P.A. (J) |
| Smith Brothers (Leicester) Limited (J) |
| Smiths Group PLC |
| Sonardyne Holdings Limited |
| Sono-Tek Corporation (J) |
| Stadler Rail AG (J) |
| Star Refrigeration Limited |
| Sulzer AG (J) |
| Supertino S.R.L. (J) |
| SVI S.P.A. (J) |
| Systemair AB |
| Tacchi Giacomo E Figli S.P.A. * (J) |
| TAI Milano S.P.A. |
| Talgo S.A. (J) |
| Taylor Devices INC |
| Teagle Holdings Limited * |
| Team INC * (J) |
| Technipfmc PLC |
| Technotrans SE (J) |
| Tecnokar S.R.L. (J) |
| Teledyne Technologies Incorporated |
| Tennant Company |
| Teradyne, Inc. |
| Terex Corporation |
| Tesmec SPA |
| Tevo Oy * |
| Textron INC |
| Thales |
| THE Jensen-Group N.V. (J) |
| THE Manitowoc Company, Inc. |
| THE Middleby Corporation (J) |
| Thwaites Limited |
| Thyssenkrupp AG * |
| Tiber Pack S.P.A. |
| Tomra Systems ASA |
| Tonello S.R.L. (J) |
| Tornado Global Hydrovacs Ltd. |
| Toro Company (The) (J) |
| Transdigm Group Incorporated |
| Tronrud Engineering AS * |
| TTM Technologies INC |
| Twin Disc, Incorporated |
| Vaisala OYJ |
| Varex Imaging Corporation (J) |
| Veeco Instruments Inc. |
| Vegsund Slip Holding AS |
| VSE Corporation |
| Wabash National Corporation * |
| Wacker Neuson SE |
| Wartsila OYJ |
| Washtec AG |
| Westinghouse AIR Brake Technologies Corporation |
| Whale Tankers Limited (J) |
| Wilton Universal Group Limited |
| Witt & SON UK Holdings Limited |
| Woodward, Inc. |
| Xylem Inc. |
| Zambello Riduttori 2 – S.R.L. (J) |
| Zebra Technologies Corp |
* Indicates that the company is a loss-maker in the year.
(J) indicates a company that was not in the ‘Develop, Make and Support’ activity group last year, but has been added this year.
Capital servicing rates
The capital servicing rates are used as part of the Step 4 Capital Servicing Adjustment (CSA) of the four-step process for determining the contract profit rate for a qualifying defence contract. A corresponding 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 4 of the contract profit rate applies.
The capital servicing rates are calculated from indices of sterling denominated corporate bonds or fixed maturity deposits. The rates are rolling averages of the underlying rates.
| 2022/23* | 2023/24 | 2024/25 | 2025/26 | 2026/27 | |
| Fixed capital servicing rate | 2.87% | 2.90% | 3.26% | 3.64% | 4.05% |
| Positive working capital servicing rate | 1.09% | 1.67% | 3.10% | 4.69% | 5.25% |
| Negative working capital servicing rate | 0.51% | 0.51% | 1.61% | 3.21% | 4.18% |
* Shown are the 2022/23 rates recommended by the SSRO. The Secretary of State determined the BPR for 2022/23 as an average of the composite underlying rates calculated by the SSRO for the three years prior to 2021 (8.50%, 8.23%, and 8.19%), keeping the BPR at 8.31 per cent. This fixed the capital servicing rates the same as for 2021/22.
Data sources
For further information on the data selection approach please see section 13 of the Single Source baseline profit rate and capital servicing rates methodology.
| Rate | Description | |
| Fixed capital servicing rate | Seven-year average of ’15-year BBB GBP’ bonds | BVCSGU15 BVLI Index |
| Positive working capital servicing rate | Three-year average of ‘1-year BBB GBP’ bonds | BVCSGU01 BVLI Index |
| Negative working capital servicing rate | Three-year average of Monthly average of UK resident monetary financial institutions’ (excl. Central Bank) sterling weighted average interest rate – time deposits with fixed original maturity <=1 year from private non-financial corporations (in percent) not seasonally adjusted | CFMBI32 |
Sources: Bloomberg and Bank of England
Trends in capital servicing rates
Government owned contractor rate
The government owned contractor rate is a baseline profit rate that may be applied to certain qualifying contracts in place of the baseline profit rate set out on page 1.
The government owned contractor rate must only apply to qualifying defence contracts where:
a. the contract is between Secretary of State and a company incorporated under the Companies Act that is wholly owned by the UK Government; and
b. both parties to the contract agree that it should apply.
| 2022/23 | 2023/24 | 2024/25 | 2025/26 | 2026/27 | |
| Government owned contractor rate | 0.046% | 0.038% | 0.00% | 0.00% | 0.00% |
Calculation of government owned contractor rate
The government owned contractor rate was first introduced for 2021/22. The government owned contractor rate is set to enable a contract profit rated of zero for contracts with companies wholly owned by the Secretary of State.
Prior to 2024/25, the government owned contractor rate was set at a level that was opposite to the SSRO funding adjustment. Schedule 10 of the Procurement Act 2023 came into force on 1 April 2024, removing the SSRO funding adjustment from the previous six-step contract profit rate process from 2024/25, meaning the government contractor rate is now set at zero.