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
119.4Statutory operating profit68.259.4
Add back:
4.5Amortisation of acquired Intangibles1.92.3
123.9Headline operating profit70.161.7

Headline profit before taxation

Year ended
31 Dec
2017
£m
Half year to
30 June
2018
£m
Half year to
30 June
2017
£m
117.0Profit before taxation67.258.2
Add back:
4.5Amortisation of acquired Intangibles1.92.3
121.5Headline profit before taxation69.160.5

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
119.4Operating profit68.259.4
64.3Depreciation and Amortisation31.831.7
0.4Impairment of fixed assets0.40.4
(0.7)Profit on disposal of property, plant and equipment(0.1)
7.8Share-based payments2.12.7
191.2EBITDA and Headline EBITDA102.594.1

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
182.8Cash generated by operations82.687.3
Less:
(74.8)Net capital expenditure(31.0)(29.7)
Add:
3.7Restructuring cash flows2.12.3
111.7Headline operating cash flow53.759.9

Free cash flow

Year ended
31 Dec
2017
£m
Half year to
30 June
2018
£m
Half year to
30 June
2017
£m
182.8Cash generated by operations82.687.3
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)
83.0Free cash flow39.442.1

Net cash

Year ended
31 Dec
2017
£m
Half year to
30 June
2018
£m
Half year to
30 June
2017
£m
41.0Cash and bank balances28.620.0
(1.4)Bank overdrafts (included in borrowings)(3.0)(2.3)
Bank loans (included in borrowings)(20.0)
39.6Net cash5.617.7

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
Revenue142.7225.3368.0
Constant exchange rates adjustment5.42.37.7
Revenue at constant exchange rates148.1227.6375.7
Headline operating profit33.343.2(6.4)70.1
Constant exchange rates adjustment1.3(0.1)(0.1)1.1
Headline operating profit at constant exchange rates34.643.1(6.5)71.2