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 |
---|
Group | ADE £m | AGI £m | Central costs and eliminations £m | Consolidated £m |
---|
Revenue | | | | |
Total revenue | 136.1 | 209.6 | – | 345.7 |
Result | | | | |
Headline operating profit prior to share-based payments and unallocated central costs | 31.6 | 38.6 | – | 70.2 |
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) | 30.7 | 36.9 | (5.9) | 61.7 |
Amortisation of acquired intangible fixed assets | (0.8) | (1.5) | – | (2.3) |
Segment result | 29.9 | 35.4 | (5.9) | 59.4 |
Finance costs | | | | (1.2) |
Profit before taxation | | | | 58.2 |
Taxation | | | | (14.6) |
Profit for the period | | | | 43.6 |
Inter-segment sales are not material.
The Group does not rely on any individual major customers.
Aerospace, Defence & Energy | Half year to 30 June 2017 |
---|
Western Europe £m | North America £m | Emerging markets £m | Total ADE £m |
---|
Revenue | | | | |
Total revenue | 61.8 | 73.6 | 0.7 | 136.1 |
Result | | | | |
Headline operating profit prior to share-based payments | 13.4 | 18.0 | 0.2 | 31.6 |
Share-based payments (including social charges) | (0.4) | (0.5) | – | (0.9) |
Headline operating profit | 13.0 | 17.5 | 0.2 | 30.7 |
Amortisation of acquired intangible fixed assets | (0.2) | (0.6) | – | (0.8) |
Segment result | 12.8 | 16.9 | 0.2 | 29.9 |
Automotive & General Industrial | Half year to 30 June 2017 |
---|
Western Europe £m | North America £m | Emerging markets £m | Total AGI £m |
---|
Revenue | | | | |
Total revenue | 129.6 | 54.7 | 25.3 | 209.6 |
Result | | | | |
Headline operating profit prior to share-based payments | 25.1 | 6.4 | 7.1 | 38.6 |
Share-based payments (including social charges) | (1.2) | (0.3) | (0.2) | (1.7) |
Headline operating profit | 23.9 | 6.1 | 6.9 | 36.9 |
Amortisation of acquired intangible fixed assets | (0.2) | (1.3) | – | (1.5) |
Segment result | 23.7 | 4.8 | 6.9 | 35.4 |
Group | Half year to 30 June 2016 |
---|
ADE £m | AGI £m | Central costs and eliminations £m | Consolidated £m |
---|
Revenue | | | | |
Total revenue | 121.9 | 169.1 | – | 291.0 |
Result | | | | |
Headline operating profit prior to share-based payments and unallocated central costs | 27.9 | 28.6 | – | 56.5 |
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) | 27.4 | 27.9 | (6.0) | 49.3 |
Amortisation of acquired intangible fixed assets | (0.8) | (1.4) | – | (2.2) |
Segment result | 26.6 | 26.5 | (6.0) | 47.1 |
Investment revenue | | | | 0.1 |
Finance costs | | | | (1.3) |
Profit before taxation | | | | 45.9 |
Taxation | | | | (12.6) |
Profit for the period | | | | 33.3 |
Aerospace, Defence & Energy | Half year to 30 June 2016 |
---|
Western Europe £m | North America £m | Emerging markets £m | Total ADE £m |
---|
Revenue | | | | |
Total revenue | 55.9 | 65.5 | 0.5 | 121.9 |
Result | | | | |
Headline operating profit/(loss) prior to share-based payments | 11.5 | 16.6 | (0.2) | 27.9 |
Share-based payments (including social charges) | (0.2) | (0.3) | – | (0.5) |
Headline operating profit/(loss) | 11.3 | 16.3 | (0.2) | 27.4 |
Amortisation of acquired intangible fixed assets | (0.1) | (0.7) | – | (0.8) |
Segment result | 11.2 | 15.6 | (0.2) | 26.6 |
Automotive & General Industrial | Half year to 30 June 2016 |
---|
Western Europe £m | North America £m | Emerging markets £m | Total AGI £m |
---|
Revenue | | | | |
Total revenue | 104.4 | 45.6 | 19.1 | 169.1 |
Result | | | | |
Headline operating profit prior to share-based payments | 17.3 | 6.7 | 4.6 | 28.6 |
Share-based payments (including social charges) | (0.5) | (0.1) | (0.1) | (0.7) |
Headline operating profit | 16.8 | 6.6 | 4.5 | 27.9 |
Amortisation of acquired intangible fixed assets | (0.1) | (1.3) | – | (1.4) |
Segment result | 16.7 | 5.3 | 4.5 | 26.5 |
Group | Year ended 31 December 2016 |
---|
ADE £m | AGI £m | Central costs and eliminations £m | Consolidated £m |
---|
Revenue | | | | |
Total revenue | 250.9 | 349.7 | – | 600.6 |
Result | | | | |
Headline operating profit prior to share-based payments and unallocated central costs | 56.3 | 57.9 | – | 114.2 |
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) | 55.6 | 58.5 | (14.5) | 99.6 |
Amortisation of acquired intangible fixed assets | (1.5) | (3.0) | – | (4.5) |
Operating profit/(loss) prior to exceptional items | 54.1 | 55.5 | (14.5) | 95.1 |
Acquisition costs | – | (0.6) | – | (0.6) |
Segment result | 54.1 | 54.9 | (14.5) | 94.5 |
Finance costs | | | | (2.6) |
Profit before taxation | | | | 91.9 |
Taxation | | | | (24.9) |
Profit for the year | | | | 67.0 |
Aerospace, Defence & Energy | Year ended 31 December 2016 |
---|
Western Europe £m | North America £m | Emerging markets £m | Total ADE £m |
---|
Revenue | | | | |
Total revenue | 115.1 | 134.7 | 1.1 | 250.9 |
Result | | | | |
Headline operating profit/(loss) prior to share-based payments | 24.0 | 32.7 | (0.4) | 56.3 |
Share-based payments (including social charges) | (0.2) | (0.5) | – | (0.7) |
Headline operating profit/(loss) | 23.8 | 32.2 | (0.4) | 55.6 |
Amortisation of acquired intangible fixed assets | (0.3) | (1.2) | – | (1.5) |
Segment result | 23.5 | 31.0 | (0.4) | 54.1 |
Automotive & General Industrial | Year ended 31 December 2016 |
---|
Western Europe £m | North America £m | Emerging markets £m | Total AGI £m |
---|
Revenue | | | | |
Total revenue | 214.9 | 94.3 | 40.5 | 349.7 |
Result | | | | |
Headline operating profit prior to share-based payments | 36.8 | 10.7 | 10.4 | 57.9 |
Share-based payments (including social charges) | 0.4 | 0.1 | 0.1 | 0.6 |
Headline operating profit | 37.2 | 10.8 | 10.5 | 58.5 |
Amortisation of acquired intangible fixed assets | (0.4) | (2.6) | – | (3.0) |
Operating profit prior to exceptional items | 36.8 | 8.2 | 10.5 | 55.5 |
Acquisition costs | (0.4) | (0.2) | – | (0.6) |
Segment result | 36.4 | 8.0 | 10.5 | 54.9 |
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 |
---|
Revenue | 136.1 | 209.6 | – | 345.7 |
Constant exchange rates adjustment | (11.7) | (18.8) | – | (30.5) |
Revenue at constant exchange rates | 124.4 | 190.8 | – | 315.2 |
Headline operating profit | 30.7 | 36.9 | (5.9) | 61.7 |
Constant exchange rates adjustment | (2.7) | (3.2) | 0.1 | (5.8) |
Headline operating profit at constant exchange rates | 28.0 | 33.7 | (5.8) | 55.9 |