The Group has 188 locations across the world serving a range of market sectors with various thermal processing services. The range and type of services offered is common to all market sectors.

In accordance with IFRS 8 Operating Segments, the segmentation of Group activity reflects the way the Group is managed by the chief operating decision maker, being the Group Chief Executive, who on a monthly basis reviews the operating performance of six operating segments, split between the Aerospace, Defence & Energy (ADE) and Automotive & General Industrial (AGI) business areas, as follows:

  • ADE – Western Europe;
  • ADE – North America;
  • ADE – Emerging markets;
  • AGI – Western Europe;
  • AGI – North America; and
  • AGI – Emerging markets.

The split of operating segments by geography reflects the divisional reporting structure of the Group.

In accordance with the aggregation criteria of IFRS 8, the operating segments are aggregated into the Group's two key business areas, ADE and AGI, the split being driven by customer behaviour and requirements. Customers in the ADE segment tend to operate and purchase more globally and have long supply chains, whilst customers in the AGI segment tend to purchase more locally and have shorter supply chains.

Bodycote plants do not exclusively supply services to customers of a given market sector. The allocation of plants between ADE and AGI is therefore derived by reference to the preponderance of markets served.

Half year to 30 June 2017
GroupADE
£m
AGI
£m
Central costs and eliminations
£m
Consolidated
£m
Revenue
Total revenue136.1209.6345.7
Result
Headline operating profit prior to share-based payments and unallocated central costs31.638.670.2
Share-based payments (including social charges)(0.9)(1.7)(0.7)(3.3)
Unallocated central costs(5.2)(5.2)
Headline operating profit/(loss)30.736.9(5.9)61.7
Amortisation of acquired intangible fixed assets(0.8)(1.5)(2.3)
Segment result29.935.4(5.9)59.4
Finance costs(1.2)
Profit before taxation58.2
Taxation(14.6)
Profit for the period43.6

Inter-segment sales are not material.

The Group does not rely on any individual major customers.

Aerospace, Defence & EnergyHalf year to 30 June 2017
Western
Europe
£m
North America
£m
Emerging markets
£m
Total ADE
£m
Revenue
Total revenue61.873.60.7136.1
Result
Headline operating profit prior to share-based payments13.418.00.231.6
Share-based payments (including social charges)(0.4)(0.5)(0.9)
Headline operating profit13.017.50.230.7
Amortisation of acquired intangible fixed assets(0.2)(0.6)(0.8)
Segment result12.816.90.229.9
Automotive & General IndustrialHalf year to 30 June 2017
Western
Europe
£m
North America
£m
Emerging markets
£m
Total AGI
£m
Revenue
Total revenue129.654.725.3209.6
Result
Headline operating profit prior to share-based payments25.16.47.138.6
Share-based payments (including social charges)(1.2)(0.3)(0.2)(1.7)
Headline operating profit23.96.16.936.9
Amortisation of acquired intangible fixed assets(0.2)(1.3)(1.5)
Segment result23.74.86.935.4
GroupHalf year to 30 June 2016
ADE
£m
AGI
£m
Central costs and eliminations
£m
Consolidated
£m
Revenue
Total revenue121.9169.1291.0
Result
Headline operating profit prior to share-based payments and unallocated central costs27.928.656.5
Share-based payments (including social charges)(0.5)(0.7)(0.5)(1.7)
Unallocated central costs(5.5)(5.5)
Headline operating profit/(loss)27.427.9(6.0)49.3
Amortisation of acquired intangible fixed assets(0.8)(1.4)(2.2)
Segment result26.626.5(6.0)47.1
Investment revenue0.1
Finance costs(1.3)
Profit before taxation45.9
Taxation(12.6)
Profit for the period33.3
Aerospace, Defence & EnergyHalf year to 30 June 2016
Western
Europe
£m
North America
£m
Emerging markets
£m
Total ADE
£m
Revenue
Total revenue55.965.50.5121.9
Result
Headline operating profit/(loss) prior to share-based payments11.516.6(0.2)27.9
Share-based payments (including social charges)(0.2)(0.3)(0.5)
Headline operating profit/(loss)11.316.3(0.2)27.4
Amortisation of acquired intangible fixed assets(0.1)(0.7)(0.8)
Segment result11.215.6(0.2)26.6
Automotive & General IndustrialHalf year to 30 June 2016
Western
Europe
£m
North America
£m
Emerging markets
£m
Total AGI
£m
Revenue
Total revenue104.445.619.1169.1
Result
Headline operating profit prior to share-based payments17.36.74.628.6
Share-based payments (including social charges)(0.5)(0.1)(0.1)(0.7)
Headline operating profit16.86.64.527.9
Amortisation of acquired intangible fixed assets(0.1)(1.3)(1.4)
Segment result16.75.34.526.5
GroupYear ended 31 December 2016
ADE
£m
AGI
£m
Central costs and eliminations
£m
Consolidated
£m
Revenue
Total revenue250.9349.7600.6
Result
Headline operating profit prior to share-based payments and unallocated central costs56.357.9114.2
Share-based payments (including social charges)(0.7)0.6(0.6)(0.7)
Unallocated central costs(13.9)(13.9)
Headline operating profit/(loss)55.658.5(14.5)99.6
Amortisation of acquired intangible fixed assets(1.5)(3.0)(4.5)
Operating profit/(loss) prior to exceptional items54.155.5(14.5)95.1
Acquisition costs(0.6)(0.6)
Segment result54.154.9(14.5)94.5
Finance costs(2.6)
Profit before taxation91.9
Taxation(24.9)
Profit for the year67.0
Aerospace, Defence & EnergyYear ended 31 December 2016
Western
Europe
£m
North America
£m
Emerging markets
£m
Total ADE
£m
Revenue
Total revenue115.1134.71.1250.9
Result
Headline operating profit/(loss) prior to share-based payments24.032.7(0.4)56.3
Share-based payments (including social charges)(0.2)(0.5)(0.7)
Headline operating profit/(loss)23.832.2(0.4)55.6
Amortisation of acquired intangible fixed assets(0.3)(1.2)(1.5)
Segment result23.531.0(0.4)54.1
Automotive & General IndustrialYear ended 31 December 2016
Western
Europe
£m
North America
£m
Emerging markets
£m
Total AGI
£m
Revenue
Total revenue214.994.340.5349.7
Result
Headline operating profit prior to share-based payments36.810.710.457.9
Share-based payments (including social charges)0.40.10.10.6
Headline operating profit37.210.810.558.5
Amortisation of acquired intangible fixed assets(0.4)(2.6)(3.0)
Operating profit prior to exceptional items36.88.210.555.5
Acquisition costs(0.4)(0.2)(0.6)
Segment result36.48.010.554.9

Alternative performance measures

Bodycote uses various alternative performance measures (APMs), in addition to those reported under IFRS, as management believe these measures enable users of the financial statements to assess the underlying trading performance of the business. The APMs used include headline operating profit, headline earnings per share, headline profit before taxation, headline operating cash flow and free cash flow, together with current measures of revenue restated at constant exchange rates. These measures reflect the underlying performance of the business as they exclude the impact of amortisation of acquired intangible assets, exceptional items and the impact of foreign exchange movements.

The constant exchange rate comparison uses the current year reported segmental information, stated in the relevant functional currency, and translates the results into the presentational currency using the prior year's monthly exchange rates.

APMs are defined and reconciled to the IFRS statutory measures as follows:

  • Headline operating profit and headline profit before taxation are defined in the Financial highlights section;
  • Headline operating cash flow is reconciled in the Financial overview;
  • Headline earnings per share is reconciled in note 5;
  • Free cash flow is defined and reconciled in the Financial overview; and
  • Revenue and headline operating profit at constant exchange rates are reconciled to revenue and headline operating profit in the table below.
Half year to 30 June 2017
ADE
£m
AGI
£m
Central costs and eliminations
£m
Consolidated
£m
Revenue136.1209.6345.7
Constant exchange rates adjustment(11.7)(18.8)(30.5)
Revenue at constant exchange rates124.4190.8315.2
Headline operating profit30.736.9(5.9)61.7
Constant exchange rates adjustment(2.7)(3.2)0.1(5.8)
Headline operating profit at constant exchange rates28.033.7(5.8)55.9