Hello and welcome to Oxford Instruments' full-year results. I am Ian Barkshire, Chief Executive, and I'm joined here by Gavin Hill. In the presentation, I will summarize the highlights, comment on the strategic progress and group performance. Gavin will then cover the financial results and operational review before I return to run through the structural drivers for our end markets, a sustainability update, and closing with a summary and outlook. Moving straight to the highlights, the group delivered a strong financial performance, reflecting the resilience of our business model and our leading position in attractive end markets. This included strong order, revenue, and profit growth despite the challenging operational backdrop, representing an even larger uplift in performance from the 2020 pre-pandemic year. Further improvement in operating margin despite inflationary pressures and continued investments to drive future growth has been supported by continued execution of our Horizon strategy.
The enhanced performance was delivered across our portfolio, with the group well positioned in buoyant semiconductor, advanced materials, quantum, and life science markets. This supported strong growth to both academic and, in particular, to commercial customers. The strength of our end markets, combined with the future gains from our Horizon strategy, supports sustainable growth and further margin improvement, with our record order book providing increased visibility for the year ahead. Moving to an overview of our strategy, our improved financial performance is underpinned by Horizon, structured to deliver sustainable growth and move the group to an operating margin commensurate with the quality of our products and the value that they create for our customers. Our synergistic portfolio of products, which image, analyze, and manipulate materials down to the atomic and molecular level, provides scale and sustainable differentiation within advanced materials, semiconductors, life science, and quantum-related markets.
Through Horizon, we have transformed the business into a customer-centric, market-driven group, whereby we focus on global niche markets with long-term structural growth drivers where we can sustain leadership positions. We work with our customers to create the products they need to address some of the world's most complex challenges and growth opportunities, from healthcare to climate change to digital communications, positioning us at the heart of a sustainable future. We continue to build leadership and scale through our operating model, which creates expertise and balance across customer-centricity, product differentiation, customer support, and our relentless drive to improve operational efficiency, augmented by synergistic acquisitions. Looking at strategic progress, in the year, we strengthened our capabilities across the four pillars of our operating model.
Within market intimacy, we deepened our understanding of our core markets as well as attractive adjacencies, utilizing knowledge of customers' workflows to refine our sales and marketing initiatives. This has been particularly successful in supporting sales into larger and faster-growing commercial markets. Innovation and product development remain central to our business strategy. By understanding our customers' challenges, both near and longer term, we invest in the development of products that create more customer value and higher returns on our investments. This includes, for example, our dedicated portfolio for semiconductor manufacturing systems. In the year, we increased R&D investment by 9.7%, focusing on enhancing value for our existing customers and the expansion into new adjacent markets. Through our operational excellence program, we have continued to strengthen relationships across our supply chain, building long-term strategic partnerships with fewer suppliers as well as driving efficiencies within our own operations.
The importance of service continuity has been heightened by the pandemic. Through tailoring our service offerings, increasing our digital products, and investing in our regional teams, we have enhanced customer productivity and improved our efficiency. This has supported strong service order growth and better access to our customers' operational budgets. The acquisition of VTEC enhanced our materials analysis offering as well as providing growth opportunities into new areas. The business has performed in line with our expectations, and I'm delighted with the integration within the wider group. Whilst we have delivered substantial gains across the group through Horizon, we have significant further opportunities that will support further growth and margin expansion. Moving to the group performance in the year, our focus on well-funded end markets supported constant currency order growth of 24% to GBP 423 million.
This included continued strong demand from semiconductor, advanced materials, and quantum-related markets, as well as strong recovery from energy and environment and life science markets after subdued 2021, with all markets representing strong growth relative to 2020 pre-COVID levels. The one exception is research and fundamental science, where our reduced appetite for complex one-off systems and subdued customer activity resulted in a decline in orders and revenue in the year as we targeted more attractive opportunities. Our increased focus on commercial applications, combined with product launches targeting high-volume manufacturing, quality control, and corporate R&D, drove stronger growth to commercial customers, representing more than 50% of overall orders in the year, despite double-digit growth to academia. From a regional perspective, we had high double-digit order growth across Europe, North America, and Asia.
Ongoing COVID-related disruptions and supply chain challenges held back revenues in the year to GBP 367 million, representing 19% growth and resulting in a record order book for the group. I will now hand over to Gavin for the finance and operational review.
Thank you, Ian. As demonstrated by these charts, the breadth and resilience of our markets, combined with the implementation of our strategy, has yielded good progress on improving key performance indicators. On a continuing operations basis, we have delivered a five-year compound annual growth rate of 6% for revenue and 16% for adjusted profit before tax. Our operating margin has increased from 13.6% in 2017 to 18.1% in 2022. Against a backdrop of robust portfolio and capital management, along with good cash conversion, our return on capital employed has risen from 10% to 35% over the period. Our focus remains on driving growth, improving margins, and delivering high returns on capital through delivery of our strategic objectives. Turning now to our trading performance in the financial year ending March 2022, we saw strong revenue growth in the period of 15.3% against a backdrop of challenging supply chain conditions.
Organic constant currency growth, which removes revenue from the acquired VTEC business, was 14.5%. Adjusted operating profit increased by 16.9% to GBP 66.3 million. On an organic constant currency basis, the increase was 15.2%. The adjusted operating margin increased by 30 basis points from 17.8% to 18.1%. Adjusting items include amortization of acquired intangibles of GBP 9.5 million, acquisition-related costs of GBP 0.4 million, and a charge of GBP 1.7 million, which eliminates the profit arising in the acquired VTEC business from a revaluation of their inventories to fair value in accordance with accounting standards. A charge of GBP 6.4 million reflects the unwinding of a brought-forward financial derivative asset of GBP 6.1 million. The fall in statutory profit measures from the previous year is principally due to this charge relative to a large credit the previous year. Adjusted profit before tax increased by 17.9% to GBP 65.9 million.
The effective tax rate fell to 17.8%, reflecting a prior adjustment that primarily relates to the recognition of patent box claims. Adjusted basic earnings per share increased by 20% to 94.3 pence. The total dividend of 18.1 pence per share reflects an increase of 6.5%. I will now briefly look at the high-level revenue and adjusted operating profit movements by sector before looking at each sector in more detail. We have seen strong revenue growth across all three sectors. Materials and characterization grew by 18.9%, research and discovery by 9.3%, and service and healthcare by 13.5%. The VTEC acquisition contributed additional revenue growth of 4.7% for the seven months under ownership. Strengthening of sterling against our major trading currencies resulted in a currency headwind of GBP 12.4 million. Turning to adjusted operating profit by sector, group adjusted operating profit increased by 16.9% to GBP 66.3 million, equivalent to a margin of 18.1%.
We saw margin climbing across all three sectors, with materials and characterization climbing to 14.1%, research and discovery to 17.7%, and service and healthcare to 30.7%. The VTEC acquisition contributed constant currency profit growth of 5.1% for the period under ownership, and we faced a currency headwind of GBP 1.9 million in the year. Looking at our materials and characterization segment in more detail, product demand has been driven by investment in production capacity and research applications across our semiconductor and communications markets. Our portfolio of imaging and analysis systems includes our market-leading X-ray and electron analysis systems used in conjunction with electron microscopes, as well as our performance-leading atomic force microscopes. These are used in the manufacturing process to measure composition and structure.
Our advanced semiconductor etch and deposition processing systems provide customers with the ability to create and manipulate materials and are primarily used in the fabrication of advanced compound semiconductor devices. Market growth, especially into the commercial sector, has led to strong demand for these systems. We have also seen continued investment into materials research and battery technology supporting demand, particularly for our imaging and analysis systems. The acquisition of VTEC and their Iman Imaging Technology will support growth across our advanced materials and healthcare and life science markets. Investment in healthcare research has led to good demand for our scientific cameras and confocal microscopes. During the year, we launched our new benchtop microscopy system, BC43, which has been designed to offer leading healthcare research capability. This is already proving promising and accelerating our understanding of cell dynamics for cancer research applications.
A strong recovery for imaging cameras from our OEM partners is driving growth across our end markets. Demand for our cryogenic systems and scientific cameras is being driven by an increase in research and quantum computing as governments and commercial enterprises assess the potential disruption that quantum computing can have on existing markets and applications. We are deprioritizing complex cryogenic and magnet systems for use in research and fundamental science applications, resulting in a reduction in this market segment. We continue to enhance our service offering and drive remote connectivity, supporting customers through tailored service offerings by end application and region. During the year, we have transitioned to a regional service model, driving growth and promoting efficiencies. Our business in Japan for MRI healthcare customers continues to deliver excellent levels of quality service and support. Revenue at organic constant currency was broadly flat in Europe.
This is primarily due to fewer shipments of semiconductor process systems due to supply chain constraints, in addition to a move away from tenders with highly configured systems. Strong demand for our analyzers for electron microscopes, as well as our imaging and microscopy products, supported growth in North America of 12%. Organic constant currency growth in Asia of 30% was driven by strong demand for our semiconductor processing systems, electron microscope analyzers, and cryogenic systems, largely across commercial markets. With respect to orders, we have seen strong growth across all key regions. With total orders in the year of GBP 423 million, our book-to-bill ratio was 115%. The total order book of GBP 260 million has grown by 27% on an organic constant currency basis, providing good visibility for the current financial year.
We have witnessed very strong growth across all materials and characterization constituent businesses, with organic constant currency growth of 45%. Research and discovery grew by 13% with strong demand for our imaging and microscopy products and X-ray tubes. Having a look now at the cash flow, working capital increased by GBP 11.8 million. This reflects a high level of invoicing against deposits for new orders, as well as for shipments and acceptances made close to the year end, particularly with reference to high-value semiconductor process systems. Capital expenditure of GBP 13.9 million includes GBP 7.4 million relating to construction of our new semiconductor facility. For the financial year ending 31 March 2023, we expect additional payments of GBP 25 million to complete the facility. This excludes any proceeds from the sale of the current location. Cash conversion of 84% on a normalized basis excludes expenditure relating to the new semiconductor facility.
Deficit recovery payments of GBP 7.6 million were made to the U.K. Defined Benefit Pension Scheme. We are recording an accounting asset of over GBP 50 million and expect to attain funding self-sufficiency sometime in 2025. Acquisition expenditure for VTEC, net of cash acquired, was GBP 30.6 million. Net cash was GBP 85.9 million at the end of March, down from GBP 97.6 million at the end of last year, mainly due to the acquisition consideration offsetting good operational cash flow. Based on historical trading and current forecasts, we would expect to pay the full earnout consideration for VTEC of EUR 5 million during this financial year. As regularly presented, the business has a large exposure to foreign currency fluctuations. This chart shows the long positions for our major trading currencies, as well as the short sterling position. As you can infer from the previous slide, the group's financial results will be subject to currency fluctuations.
We maintain a hedging program to mitigate currency movements up to 18 months forward from the next reporting date, covering up to 80% of forecast transactional exposures. In the year, we recorded an adverse currency impact of GBP 12.4 million to revenue and GBP 1.9 million to operating profit. Looking ahead to this trading year, our assessment of the currency impact is, based on hedges currently in place and forecast FX rates, an increase in revenue of approximately GBP 5.1 million and a decrease in adjusted operating profit of GBP 4 million. We do not hedge revenue, thus explaining the divergent movements. Forecast rates are 1.28 for sterling dollar, 1.20 for sterling euro, and 163 for sterling yen.
Looking further ahead to the financial year 2023/2024, using the same currency rate assumptions, we would expect a neutral effect to revenue and a tailwind of GBP 1.9 million to operating profit. Currency headwind guidance is lower than given at the half-year going to favorable currency movements. The actual currency impacts will be dependent on currency volumes and mix, as well as currency rates at the time of shipments and customer acceptances, and is therefore subject to a high degree of uncertainty. To summarize key financial highlights from the year, despite supply chain disruption, organic revenue growth was over 15%. Adjusted operating margin was lifted to 18.1%, with margin improvement across all sectors. Strong adjusted EPS growth supports an increase in the total dividend for the year of 6.5%. A de-risking of the defined benefit pension scheme over recent years supports its progress towards self-sufficiency sometime in 2025.
Net cash of £85.9 million provides us with a strong balance sheet to support future growth in the business through organic investment and acquisition opportunities. We ended the year with a strong order book providing good visibility for the year ahead. However, we continue to anticipate challenges from a potential tightening of export regimes, supply chain disruption, and cost inflation. With that, I'll hand back to Ian.
Thank you, Gavin. Let me now turn to an overview of our end markets. Our strategy of bringing high-value products to a selected range of markets, each with long-term structural growth drivers, provides a resilience to our business model. The global economic recovery and increasing sustainability agenda have reinforced their drivers, increasing funding across both commercial and academic customers.
Within healthcare and life science, the drive to improve the health and well-being of society is being heightened by an aging population, the affordability of healthcare provision, as well as the need to reduce the development costs and timelines of new medicines. In semiconductor and communications, the use of semiconductor chips within industrial systems and consumer products is driving increased demand. This is further fueled by the desire for faster computers, exponential growth in data generation, and surging demand for improved connectivity. Materials are the building blocks for an advanced society, enabling everything from the screens we watch, the cars we drive, to the batteries that power our world. They enable the improved performance we all desire, as well as a route to more sustainable manufacturing.
In energy and environment, climate change and increasing energy demand is driving the investment in green technologies, more energy-efficient devices, and the security of food supply. Quantum technologies provide the potential to transform existing markets from drug discovery to logistics and financial services. This is leading to a rapidly evolving commercial landscape, as leading corporates and numerous startups seek to gain leadership positions, in addition to comprehensive national funding programs. The research and fundamental science market drives longer-term economic and social progress through developing the technologies of the future. Within each of these markets, we are providing the imaging, analysis, unique environments, and semiconductor processing tools that enable our customers to meet today's increasing demand and the delivery of their future roadmaps. Looking at some specific examples of where our products are used, and starting with personalized medicine.
For most diseases, there are numerous variants, with significant differences in how each variant affects different individuals. This results in a wide range of patient outcomes for a particular medicine, as well as severe side effects for others. Personalized medicines provide the opportunity to optimize treatments for individual patients, transforming outcomes and shrinking development times. Our products are critical in this journey by providing understanding of the fundamental disease mechanisms and the efficacy of treatments. For example, using live cells from patients' biopsies, our optical microscopy systems enable direct observation of the disease and cell dynamics down to the molecular level, as well as the individual's specific response to various treatments. These approaches are bringing personalized treatment plans ever closer, which will ensure optimal outcomes for cancer patients and those battling other conditions.
Our new benchtop microscopy system augments our portfolio, providing research-grade performance with unprecedented ease of use at a more affordable price, enabling broader customer adoption. Moving to the characterization of semiconductor devices. As I mentioned earlier, there is the continuous desire for faster processors and higher manufacturing yields with reduced costs. This results in the relentless drive for smaller devices, with the density of components per chip roughly doubling every two years. As devices shrink and with current features down to 10 nanometers in size, the ability to image and analyze down to the nanoscale becomes ever more critical. Over the years, we have worked closely with the semiconductor industry to develop a market-leading portfolio of tailored imaging and analysis solutions.
This includes our atomic force microscope, which identifies harmful contamination and defects on wafers, as well as our advanced lift-out solution, which extracts thin slices from the wafer for subsequent ultra-high-resolution analysis of the device structure using our X-ray analysis system. Our solutions, which are embedded in the leading customers' workflows, play a key part in enabling today's manufacturing and the successful development of tomorrow's devices. Moving to power semiconductors, as the world looks to reduce greenhouse gas emissions, the need for more energy-efficient and higher-performing power devices is driving the transition to silicon carbide and gallium nitride compound semiconductors, delivering transformational improvements across applications from electric vehicles through to consumer electronics. However, their wide-scale deployment requires improved manufacturing at lower costs of more complex device structures and with new materials. We are enabling this journey through our portfolio of dedicated production systems, as well as our proprietary process recipes.
These allow preparation of the wafer surface, the subsequent precise etching of the three-dimensional device structures, and the deposition of the ultra-thin layers. Our focus on developing leading solutions for those critical layers that dominate the overall device performance and manufacturing yield has supported strong growth to commercial customers in the year. As a final example, looking at how we support the transformation of the automotive industry through the use of advanced materials. Here, the increasingly stringent emissions regulations and customer demand for higher fuel efficiency and vehicle range per charge is driving the pursuit of lighter materials whilst maintaining structural integrity. Advanced steels can reduce the weight by up to 25%, whilst also significantly improving their strength. This is achieved by advanced annealing processes to produce precise compositions and specific nanoscale grain structures.
Our Symmetry grain structure analyzer and X-ray detectors provide clear leadership in the ability to observe the extremely small features with an unprecedented throughput and dedicated workflows for both production and applied R&D. With steel production contributing about 8% of global CO2 emissions, steel manufacturers are investing significantly in these new materials to support their own and their customers' net zero ambitions. Moving to progress with our sustainability agenda. Sustainability is a cornerstone of our long-term strategy to drive stakeholder value and is central to our values and how we operate as a group. We recognize the important role that we play and the positive impact that our products have in enabling a sustainable future. Establishing a board-level committee and embracing the TCFD reporting framework has helped us steer the evolution of our sustainability agenda, which is well embedded across the group's decision-making and operational processes.
Whilst the impact from our own facilities on the environment is relatively small, over the past few years, we have made great strides in reducing the carbon footprint and waste products from our own manufacturing facilities. This includes 100% use of renewable electricity for our U.K. sites, representing 85% of group revenue, and with three of these sites producing zero waste to landfill. We remain committed to continuous progress and are currently assessing our overall footprint, including supply chain, distribution, and customer use of our products, and will validate our findings through the Science-Based Targets Initiative. We've also continued to improve the diversity across our workforce, with female employees increasing to 25% and representing 34% of new recruits in the year. In the coming year, we will further develop our long-term ambitions and targets for social, environment, and government aspects of our sustainability agenda.
Now, sustainability in its broadest sense is one of the most transformational opportunities in our lifetimes and one that brings us closer to realizing our mission of changing the art of the possible. It is with this mindset that we are committed to making even greater progress this year and beyond. Finally, moving to a summary and outlook. The group has delivered strong order and revenue growth, representing considerable progress relative to the 2020 pre-COVID year. This has included strong growth in operating profit and improved margins. We have successfully navigated the turbulence of the last two years and have emerged as a stronger, more focused business, even better aligned to meet the needs of our customers in attractive end markets with long-term structural growth drivers. The business has performed strongly this year, despite supply chain disruption and cost inflation.
Looking ahead, we do not foresee short-term relief from the current economic headwinds and ongoing supply constraints. However, our diverse end markets remain resilient, and we enter the year with a record order book and continued order growth. This supports a full-year outlook in line with our expectations. Our leading market positions and the strength of our brand provide the foundation for sustainable organic growth and continued margin expansion over the medium term, while our strong financial position supports augmenting growth through synergistic acquisitions. That concludes our full-year results presentation.