Pdf

The following review reflects constant currency growth rates unless stated otherwise.

The ADE divisions

We have 63 ADE facilities around the world including classical heat treatment, hot isostatic pressing (HIP) and Surface Technology Facilities.

Revenue for the first half of the year was £142.7m, an increase of 8.8% (4.8% at actual rates). Headline operating profit was £33.3m an increase of 13% (8% at actual rates), benefiting from positive operational leverage as revenues grew. Accordingly, return on sales improved to 23.3% (H1 2017: 22.6%). Statutory operating profit grew to £32.9m (H1 2017: £29.9m).

Net capital expenditure in the period was £11.0m (H1 2017: £10.8m), representing 1.0 times depreciation. We have invested in new HIP capacity in Europe with Belgium receiving a new HIP later this year and we have also placed an order to increase our HIP capacity in North America. In addition, we commenced investment in a new UK facility to support our growing UK civil aviation business.

The AGI divisions

Our extensive network of more than 120 AGI facilities enables the business to offer the widest range of technical capability and security of supply, while continuing to increase the proportion of technically differentiated services that it offers. Bodycote has a long and successful history of servicing this division's wide-ranging customer base.

Revenue was £225.3m, 8.6% ahead of the prior year (7.5% at actual rates). Our new facilities, including LPC and S3P facilities and those in Emerging Markets, are developing in line with expectations. Emerging Market growth was above 20%, with growth in Mexico and China over 30%. The addition of LPC capacity in Mexico for specific automotive programmes has helped drive this significant growth.

Headline operating profit was £43.2m (H1 2017: £36.9m), 17% ahead of the prior period (17% at actual rates). Return on sales expansion has been a focus for our AGI business over many years now and, at 19.2%, we delivered return on sales improvement once again (H1 2017: 17.6%). Statutory operating profit grew to £41.7m (H1 2017: £35.4m).

Net capital expenditure was £18.9m (H1 2017: £16.2m) representing 1.0 times depreciation. We are continuing to invest in the rapid growth Emerging Markets, as well as supporting new capacity for auto programmes that we have won.