Bodycote uses various 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 profit before taxation, EBITDA, headline EBITDA, headline earnings per share (EPS), headline operating cash flow, free cash flow and net cash. These measures reflect the underlying performance of the business as they exclude the impact of amortisation of acquired intangible assets and exceptional items. The Group also uses revenue growth percentages adjusted for the impact of foreign exchange movements, where appropriate, to better represent the underlying performance of the business. The measures described above are also used in the targeting process for executive and management annual bonuses (headline operating profit, operating cash-flow) and share schemes (headline operating profit, headline operating cash flow, headline EPS).
The constant exchange rate comparison uses the current year reported segmental information, stated in the relevant functional currency, and translates the results into its presentational currency using the prior year's monthly exchange rates.
APMs are defined and reconciled to the IFRS statutory measure as follows:
Headline operating profit
Year ended
31 Dec
2017
£m | | | Half year to
30 June
2018
£m | Half year to
30 June
2017
£m |
|---|
| 119.4 | | Statutory operating profit | 68.2 | 59.4 |
| | Add back: | | |
| 4.5 | | Amortisation of acquired Intangibles | 1.9 | 2.3 |
| 123.9 | | Headline operating profit | 70.1 | 61.7 |
Headline profit before taxation
Year ended
31 Dec
2017
£m | | | Half year to
30 June
2018
£m | Half year to
30 June
2017
£m |
|---|
| 117.0 | | Profit before taxation | 67.2 | 58.2 |
| | Add back: | | |
| 4.5 | | Amortisation of acquired Intangibles | 1.9 | 2.3 |
| 121.5 | | Headline profit before taxation | 69.1 | 60.5 |
EBITDA and Headline EBITDA (Earnings Before Interest, Taxation, Depreciation and Amortisation)
Year ended
31 Dec
2017
£m | | | Half year to
30 June
2018
£m | Half year to
30 June
2017
£m |
|---|
| 119.4 | | Operating profit | 68.2 | 59.4 |
| 64.3 | | Depreciation and Amortisation | 31.8 | 31.7 |
| 0.4 | | Impairment of fixed assets | 0.4 | 0.4 |
| (0.7) | | Profit on disposal of property, plant and equipment | – | (0.1) |
| 7.8 | | Share-based payments | 2.1 | 2.7 |
| 191.2 | | EBITDA and Headline EBITDA | 102.5 | 94.1 |
Headline earnings per share
A detailed reconciliation is provided in note 6.
Headline operating cash flow
Year ended
31 Dec
2017
£m | | | Half year to
30 June
2018
£m | Half year to
30 June
2017
£m |
|---|
| 182.8 | | Cash generated by operations | 82.6 | 87.3 |
| | Less: | | |
| (74.8) | | Net capital expenditure | (31.0) | (29.7) |
| | Add: | | |
| 3.7 | | Restructuring cash flows | 2.1 | 2.3 |
| 111.7 | | Headline operating cash flow | 53.7 | 59.9 |
Free cash flow
Year ended
31 Dec
2017
£m | | | Half year to
30 June
2018
£m | Half year to
30 June
2017
£m |
|---|
| 182.8 | | Cash generated by operations | 82.6 | 87.3 |
| | Less: | | |
| (74.8) | | Net capital expenditure | (31.0) | (29.7) |
| (2.1) | | Financing costs | (0.9) | (1.2) |
| (22.9) | | Taxation | (11.3) | (14.3) |
| 83.0 | | Free cash flow | 39.4 | 42.1 |
Net cash
Year ended
31 Dec
2017
£m | | | Half year to
30 June
2018
£m | Half year to
30 June
2017
£m |
|---|
| 41.0 | | Cash and bank balances | 28.6 | 20.0 |
| (1.4) | | Bank overdrafts (included in borrowings) | (3.0) | (2.3) |
| – | | Bank loans (included in borrowings) | (20.0) | – |
| 39.6 | | Net cash | 5.6 | 17.7 |
Revenue and headline operating profit at constant exchange rates
Reconciled to revenue and headline operating profit in the table below.
| Half year to 30 June 2018 |
|---|
| ADE
£m | AGI
£m | Central
costs and
eliminations
£m | Consolidated
£m |
|---|
| Revenue | 142.7 | 225.3 | – | 368.0 |
| Constant exchange rates adjustment | 5.4 | 2.3 | – | 7.7 |
| Revenue at constant exchange rates | 148.1 | 227.6 | – | 375.7 |
| Headline operating profit | 33.3 | 43.2 | (6.4) | 70.1 |
| Constant exchange rates adjustment | 1.3 | (0.1) | (0.1) | 1.1 |
| Headline operating profit at constant exchange rates | 34.6 | 43.1 | (6.5) | 71.2 |